Additional shareholders in Sunrise are leaning towards joining German service provider and Sunrise’s largest shareholder Freenet in opposing the Swiss telco’s acquisition of UPC Switzerland, according to a report by Reuters.
Citing unnamed sources, Reuters reports that two big investors will oppose the deal with Liberty Global, while a third has expressed reservations.
Additional opposition would pile pressure on Sunrise’s board to seek a restructuring of the agreement or risk seeing it fail to secure a majority for the merger at a forthcoming extraordinary general meeting.
Shareholders concerns focus on the price and allocation or risk as defined by the existing terms of the deal rather than its strategic rationale.
Hostilities between Sunrise and Freenet erupted two weeks ago with Sunrise accusing Freenet board representatives of “a conflict of interest” and resolving to exclude them from discussions about the merger after Freenet accused Sunrise of agreeing to pay too much for UPC Switzerland at a time when the cable business is under pressure.
The pair also disagreed over the allocation of risk associated with the deal. Freenet aid that Sunrise shareholders are being required to underwrite a UPC Switzerland turnaround and related integration risks, while paying away potential synergies of CHF1.3 billion (€1.2 billion) to Liberty Global in advance
Liberty Global meanwhile has rejected making any changes to its agreement with Sunrise for the sale of its Swiss unit following the eruption of hostilities between Sunrise and its biggest shareholder, Germany’s Freenet over the terms of the deal.
Noting the “recent statements” from the pair on the transaction, Liberty said that was “fully committed to completing the transaction as agreed”.
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18th September 2019