While both parties were keen on the CHF6.3 billion (€5.67 billion) deal, repeated opposition from Freenet – which holds a 24.5% stake in Sunrise – ultimately proved to be its undoing.
The company had initially scheduled an EGM to approve the announced reduction in the size of the rights issue planned to finance the deal on October 23, but this was cancelled to leave the deal looking less-than-likely.
Now, while announcing its Q3 results, the Swiss operator has officially cancelled the deal. Sunrise will suffer a CHF50 million (€46 million) penalty as a result, while it also expects total additional transaction-related costs of CHF70-75 million. This is made up of CHF19 million in underwriting fees advisory and legal fees, along with the already incurred integration costs of CHF24 million.
Responding to the news, Mike Fries, CEO of Liberty Global, said: “While we would have preferred to keep the current SPA in place, we understand this move by Sunrise. The Sunrise board has been navigating a difficult situation. We look forward to continuing our conversations with either the board or Freenet about a potential transaction that creates significant value for both sets of shareholders and Swiss consumers. There is no question that UPC remains the fulcrum player in Switzerland’s converging telecom market.”
UPC issued a statement acknowledging the termination, while reaffirming that “it it is looking forward to continuing conversations with either the board of Sunrise or Freenet about a potential transaction that creates significant value for both sets of shareholders and Swiss consumers.”
UPC also said that it will continue to “implement its growth plan, investing in the further development of its products and in the expansion of its high-performance cable network infrastructure.”
Overall, Sunrise saw its net income increase by 52% to CHF48 million (€43.9 million).
Revenue increased by 1% to CHF474 million (€430.42 million) in the period, while Sunrise expects to reach its targets for the year.
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24 November 2020 @ 20:00:00 UTC