Liberty has agreed agreed to make an all cash public tender offer for all publicly held shares of Sunrise at a price of CHF110 per share, representing a premium of 32% on the Swiss operator’s 60-day average share price and giving the latter a total enterprise value of CHF6.8 billion.
Liberty said that the combination would create the leading national converge challenger to Swisscom in the Swiss market, with revenues of CHF3.1 billion. The conbined company will have 2.1 million mobile post-paid subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers, giving it approximately 30% market share in each segment.
The purchase will be funded by existing cash to the tune of CHF3.5 billion, supplemented by new debt.
Crucially, Liberty’s offer secured the approval of Sunrise’s biggest shareholder, Germany’s Freenet, which effectively scuppered the deal last year. Sunrise’s board is unanimously recommending that its shareholder’s accept the offer.
Liberty said it expected the acquisition to generate synergies of CHF3.1 billion after integration costs.
“The industrial logic of this merger is undeniable, but the real winners are Swiss consumers and businesses. This powerful combination of 5G wireless and gigabit broadband will accelerate digital investment at a time when connectivity has never been more essential. Fixed-mobile convergence is the future of the telecom sector in Europe, and now Switzerland will have a true national challenger to drive competition and innovation for years to come. We look forward to welcoming Sunrise employees to the Liberty and UPC family and congratulate them and the board on their success,” said Liberty Global CEO Mike Fries.
“This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets, crystallizing the value of our superior broadband networks and driving long-term, sustainable free cash flow growth. Even after this deal, and assuming completion of our recently announced UK transaction, we will continue to have approximately $US7 billion of liquidity to drive value-creation for shareholders.”
Thomas D Meyer, chairman of Sunrise Board, said: “In making this offer, Liberty Global is recognizing the quality and resilience of our business and its potential going forward. The Board believes that the offer is in the best interest of our shareholders and will create opportunities for the Sunrise employees to be part of a fully converged national champion. The combination of Sunrise and UPC Switzerland will create the leading fixed-mobile challenger in the Swiss telecoms market, with the scale and infrastructure to compete against Swisscom.”
Liberty Global abandoned its planned sale of UPC Switzerland, whose business has been challenged by the competitiveness of the Swiss market, to Sunrise in December last year amid a debacle that saw Sunrise’s management fail to convince shareholders, notably its largest shareholder Freenet, of the merits of the deal.
The collapse of the sale led to the resignation of Sunrise CEO Olaf Swantee and chairman Peter Kurer in January.
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