Germany’s Freenet has announced it will vote against Sunrise’s planned share issue to finance the takeover of UPC Switzerland. Freenet is the largest shareholder in Sunrise with a 24.5 per cent stake. There will be a shareholder vote on the CHF 4.1 billion (€3.8bn) rights issue.
Freenet has expressed doubts about the takeover since it was first announced in February. The company said that it found the price too high and UPC’s owner Liberty Global was not bearing enough of the risk of turning around the struggling cable operator. “The price allows Liberty Global to profit already from the expected synergies of merging Sunrise and UPC. The potential synergies of CHF 1.3 billion are being paid away to Liberty Global in advance”, without the company helping to realise the integration, Freenet said.
To help lower the risk and increase Liberty Global’s participation, Freenet called for a stock element in the purchase price, rather than an all-cash transaction.
Freenet said the unfavourable terms were reflected in the fall in in Sunrise’s share price since the takeover was announced It added that Sunrise should be able to secure better terms, given its “excellent positioning and outstanding prospects standalone as evidenced by its consistent outperformance of its peers since IPO”.
Sunrise acknowledged Freenet’s position saying it “remains convinced that the acquisition of UPC Switzerland creates a stronger and more valuable Sunrise, benefitting from a compelling strategic rationale”. Sunrise added that the quarterly results of UPC “are in line with the turnaround plan of Liberty Global and even slightly ahead of expectations”.