Zurich The Swiss telecom company Sunrise is willing to concessions because of the skepticism of investors in the planned billion takeover of cable operator UPC Switzerland. Sunrise is open to change the financing of the transaction, as the company announced on Thursday. Thus, the volume of the capital increase could be lower than the originally planned 4.1 billion Swiss francs. Instead, the debt could be increased.
The German major shareholder freenet has been resisting the deal for some time and had recently announced it would refuse to approve the capital increase to finance the acquisition. Freenet holds a 24.5 percent stake in Sunrise. That alone is not enough to block the capital increase, for which a simple majority of the owners must pronounce. But because at general meetings never all shareholders are present, Freenet has a considerable weight.
Even analysts were skeptical about this with the seller Liberty Global Negotiated purchase price of 6.3 billion francs and the financing structure. Sunrise said the increase in debt to finance the acquisition is possible because UPC has done better in the operating business than expected.
In addition, after six months of detailed integration planning, the Group increased its estimate of annual synergies to 280 million francs from 235 million. The Board of Directors proposed Freenet to reduce the capital increase by around CHF 1 billion and to issue a convertible bond instead. But the Germans had rejected the proposal.
Meanwhile, the cloth seems to be cut between the two sides. The concerns raised were unfounded, Sunrise said. Freenet wants to solve its own short-term financial restrictions at the expense of Sunrise and the other shareholders. For the time being, the Freenet representatives on the Board of Directors would be excluded from the deliberations on the transaction.
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Sunrise (t) Telecom (t) Switzerland (t) UPC (t) Cable network (t) Takeover (s) Freenet (t) Financing (t) Capital (m) Mergers & Acquisitions M & A (t) Capital Increase (t) Investment (t) Shareholder (t) Liberty Global (t) Telecommunications