The Sunrise bid for UPC Switzerland has taken another acrimonious turn as the bidder has suspended board members from its largest shareholder, Freenet, after accusing them of a ‘conflict of interest’ – Freenet is opposing the deal.
Responding to Freenet’s announcement that it intended to vote against the acquisition by Sunrise of Liberty Global’s Swiss unit, Sunrise said that the concerns raised by the German service provider were “neither justified nor in the best interest of Sunrise and all its shareholders” and accused Freenet of being “guided by its own short-term financial constraints and self-serving objectives”.
Sunrise also accused Freenet of requesting an “inappropriate and illegal” purchase of Freenet shares at a premium by either Sunrise or Liberty Global in exchange for it giving a green light to the deal during Sunrise’s final negotiations with Liberty Global. Such a deal would have been at the expense of other shareholders, claimed Sunrise.
Sunrise also rejected Freenet’s demand that Liberty Global retain more debt rather than transfer it to Sunrise as part of the deal as “opportunistic and inappropriate” in view of an increased expectation of synergies from the merger of the pair and the standalone value of UPC Switzerland.
Sunrise said it was assessing whether Freenet’s representatives on the Sunrise board had “breached their fiduciary duties, including their duty of confidentiality” and that it had resolved to exclude them from deliberations on the acquisition as a result of their “conflict of interest”.
“This decision has not been made lightly but is unavoidable given Freenet’s conduct,” Sunrise said.
Freenet holds a 24.5 per cent stake in Sunrise and stated it will vote against Sunrise’s CHF4.1 billion (€3.76bn) capital increase to finance the CHF6.3 billion buy.
Sunrise posted Q2 revenues of CHF463 million, down 1.07 per cent, and adjusted EBITDA of CHF150 million, up 10.3 per cent. The operator saw its mobile post-paid, landline voice, internet and TV subscriber bases rise, with TV numbers up 14.8 per cent to 229,000.
Pre-paid mobile customers declined by 13.9 per cent to 687,000, while postpaid customers rose by 9.5 per cent to 1.655 million. Broadband numbers were up 9.4 per cent to 442,000.