Cable magnate John Malone’s Liberty Global is buying Swiss telecom company Sunrise Communications AG in an all-cash takeover that will combine Liberty’s UPC Switzerland cable operator with a wireless network operator that has one of the world’s leading 5G networks.
Sunrise’s board is recommending that shareholders accept the deal, and Liberty Global said that Freenet AG, which is Sunrise’s largest shareholder with about 24% of the company, has signed a binding commitment to sell to Liberty. The deal values 100% of Sunrise’s equity at about $5.5 billion, and the company’s total enterprise value at $7.4 billion.
According to Liberty Global, the purchase would result in a combined business with about $2.6 billion in revenue, 2.1 million postpaid mobile subscribers, 1.2 million broadband subs and 1.3 million TV subscribers — which it says is about 30% market share in each segment.
“The combined business will be strongly positioned to continue its network roll-out including 5G and future technologies, supporting a range of new and enhanced products and services,” Liberty Global said in a release. “The integration of UPC’s gigabit network, covering around 75% of homes, with Sunrise’s existing [fiber-to-the-home] partnerships covering over 30% of homes, will ensure that 90% of Swiss households have access to 1 gigabit broadband speeds by 2021, with a clear roadmap to enable up to 10 Gbps over time. In addition, UPC Switzerland’s extensive fiber backbone will further strengthen Sunrise’s leadership position in both 4G and 5G. … Sunrise is recognized as having best-in-class mobile infrastructure, while also building a meaningful customer base in broadband and TV. UPC Switzerland is the country’s leading provider of gigabit broadband, and offers the best video platform with features such as voice control, 4K, full content offerings and best in-class TV apps. As a fully converged provider, the combined business will be well positioned to compete in the Swiss market, accelerating the sale of converged fixed-mobile services to existing customers and new services using the best of each company’s product portfolios, skills and networks.”
“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,” said Mike Fries, CEO of Liberty Global, in a statement. “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.”
He continued, “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.”
Sunrise’s stock price rose more than 26% in response to news of the deal. The tender offer is slated to be opened by the end of August. Liberty Global’s offer is conditioned upon at least two-thirds of Sunrise’s stock being tendered. After the completion of the offer process, Liberty Global plans to de-list Sunrise shares from trading on the SIX Swiss exchange.
In a separate transaction announced earlier this week, two of Malone’s other Liberty companies, Liberty Broadband (which holds a 25% in stake in Charter Communications) and GCI Liberty, the parent of Alaskan telecom company GCI, will be rolled into one entity.
