Liberty Global Plc has agreed to buy Sunrise Communications AG in a deal that values the Swiss phone carrier at about 5 billion Swiss francs (€4.6 billion) and revives a transaction that fell through last year.
The cable giant offered 110 Swiss francs per share, and Sunrise's largest shareholder, Freenet AG, has also agreed to sell its 24% stake, the companies said in a statement on Wednesday. Liberty's offer is a 28% premium to Sunrise's closing share price on Tuesday.
Chairman John Malone's Liberty Global had previously tried to sell its UPC Switzerland unit to Sunrise, but the deal was scrapped after Sunrise concluded that shareholders wouldn't support the move. Freenet in particular had raised objections.
The combination will merge Sunrise’s wireless customer base with UPC’s high-speed broadband network and video services to create a bigger challenger to the dominant player, Swisscom AG, and potentially ease pricing pressure in the competitive market.
Sunrise has been locked in an aggressive discounting war with the other Swiss carriers. Carriers are having to roll out the next generation of wireless networks, and this deal may help with the buildout, the companies said in the statement.
"This powerful combination of 5G wireless and gigabit broadband will accelerate digital investment at a time when connectivity has never been more essential,"Mike Fries, chief executive officer of Liberty Global, said in the statement. "This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets."
The tender offer will begin this month, and the deal is subject to regulatory approvals, the companies said in the statement.
Malone had agreed in February 2019 to sell the Swiss unit to raise cash to support a range of activities, including potential shareholder payouts and acquisitions in western Europe. The collapse of the talks, which had valued UPC at $6.4 billion, was a blow to the billionaire cable mogul after another deal, his attempted purchase of Millicom International Cellular SA, also fell apart on price concerns earlier in the year.
Liberty said the bid represents a 32% premium to Sunrise’s 60-day average, and Sunrise’s board has unanimously recommended the offer. Including debt, the deal values Sunrise at 6.8 billion Swiss francs, and Liberty will fund it with 3.5 billion francs of existing cash and new debt. At least two-thirds of all Sunrise shares on a fully diluted basis must be tendered for the offer to go through, and the stock will be delisted.
Sunrise's previous CEO, Olaf Swantee, stepped down after the last deal fell apart. His replacement, Andre Krause, has been in the job for less than a year. - Bloomberg