Liberty offers to buy Sunrise following failed bid for UPC

12 Aug 2020

UK-based multi-brand cable group Liberty Global has announced that it has agreed to acquire 100% of Swiss full-service provider Sunrise Communications via an all cash public tender offer. Liberty has offered to purchase the company’s shares at price of CHF110 (USD120) per share, which it says represents a 32% premium on the 60-day volume weighted average price per share for the period to 11 August 2020 and values 100% of Sunrises’ equity at CHF5.0 billion and total enterprise value of CHF6.8 billion. The offer has been unanimously recommended by Sunrise’s board of directors, and its largest shareholder – German network-independent mobile services provider freenet, which holds around 24% of Sunrise’s shares – has signed a binding and unconditional commitment to tender its shares at the offer price. The tender offer will begin by the end of August and the transaction is expected to be completed by the end of the year, pending regulatory approvals.

As noted by TeleGeography’s GlobalComms Database, Sunrise had agreed to purchase Liberty Global’s UPC Switzerland unit in February 2019 but Sunrise’s shareholder refused to approve the takeover on the basis that Sunrise would take on too much of the risk and cost of the merger. The deal was scrapped in November 2019, triggering a CHF50 million payout to Liberty Global. A merger of two of Switzerland’s major providers has been pursued for around a decade by various parties in an attempt to challenge the dominance state-owned Swisscom, which has consistently held market shares of more than 60% and 50% in the mobile and broadband segments, respectively.

In its announcements of the offer, Liberty notes that the merger of Sunrise with it UPC Switzerland division is expected to generate net total synergies of around CHF3.1 billion after integration costs, with the annual run rate of cost, CAPEX and revenue synergies estimated at around CHF275 million.

In a separate announcement from Sunrise’s directors recommending the transaction, the board noted: ‘The combination will create a stronger, fully converged nationwide challenger across all elements of the four-play bundled product, including fibre, cable, TV and mobile. The combined company will have the scale to drive innovation, invest in new services and pursue growth by providing innovative and competitively priced offers. The enlarged new company will also be better positioned to drive competition with direct benefits for the Swiss economy and consumers. The combined business will be well positioned to continue its next generation network rollouts, including 5G and future technologies, offering up to 1Gbps speeds to 90% of Swiss households by 2021, with a clear roadmap to enable up to 10Gbps over time. UPC Switzerland’s next generation fixed network with its extensive fibre backbone will further strengthen Sunrise’s leadership position in 4G and 5G.’

Switzerland, Liberty Global (incl. LGI), Sunrise Communications, UPC Switzerland