Liberty Global ends Sunrise, UPC merger talks

Liberty Global ends Sunrise - UPC merger talks

18 December 2019 | Natalie Bannerman

Cover

Liberty Global has terminated discussions about the merging of its company UPC Switzerland and Sunrise Communications.

Announced in February 2019, Sunrise was to acquire Liberty’s UPC for approximately €5.5 billion. Had the deal gone through it would have positioned Sunrise as the number two operator, behind Swisscom, in mobile, TV, fixed broadband and fixed voice.

According to Liberty Global CEO Mike Fries, discussions broke down due to internal disagreements between the Sunrise board of directors and its biggest shareholder.

“We wish Sunrise well, but we are moving on. Despite our willingness to show significant flexibility on terms, it’s clear to us that the Sunrise Board of Directors and their largest shareholder cannot agree amongst themselves on the best path forward,” said Fries.

Despite receiving unconditional regulatory approval of the deal in September, by October Sunrise cancelled its extraordinary general meeting (EGM), with approval from Liberty Global, due to a dispute with its largest shareholder. The Share Purchase Agreement for the transaction was terminated in November and Sunrise was required to pay Liberty a break fee of CHF 50 million.

But Fries is refocusing all efforts back into UPC, leveraging its own fibre backbone and building upon its subscriber base of 2.3 million homes amounting to approximately 60% of the total of Swiss homes.

“As we close that door, we are excited by the success of UPC Switzerland’s turnaround plan and free cash flow generation, and we will obviously consider other strategic options in the marketplace,” continued Fries. “We’ve seen in The Netherlands, Belgium and elsewhere around the world, that the industrial logic of fixed-mobile convergence is indisputable. UPC Switzerland is the fulcrum asset in the Swiss telecom market, with a nationwide 1 Gigabit network, the best entertainment platform and a growing fixed-mobile subscriber base.”