BY Richard Summerfield
Liberty Global has agreed to acquire Sunrise Communications in an all-cash, $7.4bn deal.
Under the terms of the deal, Liberty Global will pay 110 francs per share for Sunrise, a 32 percent premium to the company’s average share price over the past 60 days. The transaction is expected to close around year end, subject to regulatory approval.
Last year, a $6.3bn deal which would have seen Liberty sell its Swiss cable unit UPC to Sunrise collapsed following opposition from shareholders including Freenet, a German company that owns 24 percent of Sunrise. On Wednesday, Freenet pledged its support to the new bid, which “appreciates the value that Sunrise has created over the past five years”.
“The industrial logic of this merger is undeniable, but the real winners are Swiss consumers and businesses,” said Mike Fries, chief executive of Liberty Global. “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.
“This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets, crystallising 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 $7 billion of liquidity to drive value-creation for shareholders,” he added.
“Sunrise has delivered on its quality-focussed strategy and built one of the best mobile networks worldwide,” said Andre Krause, chief executive of Sunrise. “We have successfully gained market share in all our businesses, underpinned by our strong focus on customer centricity, service excellence, innovation and quality offering. We are very proud of what our employees have achieved and believe that the combination with UPC Switzerland will enable the combined company to become the leading fully converged challenger in the market.”
The combined business will have 3.17bn Swiss francs in revenue, with a customer base comprising 2.1 million mobile subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers — around a 30 percent market share in each segment, according to Liberty Global.
News: Liberty Global surprises with $7.4 billion deal to buy Sunrise in latest telecoms consolidation