- Transaction values UPC Switzerland
at CHF 6.3 billion ($6.3 billion1) or 10x Estimated 2019
Adjusted Segment OCF2
- Net cash proceeds3
expected to be CHF 2.6 billion3 ($2.6
billion1)
- Combined business will create
leading challenger in competitive quad play market
- Transaction expected to close prior
to year-end 2019
Liberty Global plc (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and
LBTYK) today announced that it has reached a binding agreement to
sell its Swiss operation, UPC Switzerland, to Sunrise
Communications Group AG (“Sunrise”). At December 31, 2018, UPC
Switzerland’s network passed 2.3 million homes and served 1.1
million customers who subscribed to 1.1 million video, 700,000
broadband and 520,000 voice services.
The transaction will create the leading converged challenger in
the market with scale across all elements of the quad play bundle.
As the #2 player in mobile, TV, fixed broadband and fixed voice,
the combined company will have the scale to drive innovation,
invest in new services and pursue growth with competitively priced
offers.
Liberty Global will sell UPC Switzerland for a total enterprise
value of CHF 6.3 billion ($6.3 billion1) on a U.S. GAAP basis.
Sunrise will acquire the business inclusive of the UPC Holding
borrowing group’s existing senior and senior secured notes4 and
associated derivatives (together, the “Notes”) and certain other
debt items, which have an aggregate value equal to approximately
CHF 3.7 billion ($3.7 billion1) at December 31, 2018. The net
proceeds to Liberty Global, which will be paid in cash, are
expected to be CHF 2.6 billion3 ($2.6 billion1), subject to
customary other liabilities and working capital adjustments at
completion.
The enterprise value implicit in the sale price represents a
multiple of 10x UPC Switzerland’s currently estimated 2019 adjusted
segment operating cash flow (“Segment OCF”2), as otherwise
customarily defined by Liberty Global, or approximately 22x UPC
Switzerland’s estimated 2019 operating free cash flow (“OFCF”)5.
Closing of the transaction is subject to regulatory approval, which
is expected prior to year-end 2019, and approval by Sunrise’s
shareholders with respect to an associated capital increase.
Mike Fries, Chief Executive Officer of Liberty Global, said,
“Today’s announcement further validates our strategy of building or
enabling national champions in our core European markets. After 13
years of investment, innovation and growth, UPC Switzerland will
combine with Sunrise to form a strong challenger in the Swiss
market. This is a great moment for the Swiss consumer as network
quality, product innovation and customer experience is at the heart
of both companies. We are extremely proud of what we have achieved
in this market, and are thrilled for our shareholders who will
benefit from yet another example of value creation. After an
investment of $1.6 billion in 2005, we will have realized at
closing $6.5 billion of dividends and equity proceeds, or nearly
four times our capital in this market.”
The net proceeds from the sale are expected to be used for
general corporate purposes.
Liberty Global has agreed to provide certain transitional
services to Sunrise for a period of up to five years following
completion. Such transitional services principally comprise network
and information technology-related functions. The annual charges
for such transitional services will depend on the actual level of
transitional services required by Sunrise.
Credit Suisse, J.P. Morgan and LionTree acted as financial
advisers to Liberty Global on the transaction.
FORWARD-LOOKING STATEMENTS AND DISCLAIMER
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including statements regarding UPC Switzerland’s 2019
estimated adjusted Segment OCF and OFCF, expected net proceeds, the
anticipated closing of the sale of UPC Switzerland, the expected
use of net proceeds and other information and statements that are
not historical fact. These forward-looking statements involve
certain risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by these
statements. These risks and uncertainties include the ability to
obtain regulatory approval for the transaction, approval by
Sunrise’s shareholders, our and Sunrise’s ability to achieve other
customary closing conditions for the transaction, as well as other
factors detailed from time to time in Liberty Global’s filings with
the Securities and Exchange Commission including our most recently
filed Form 10-K. These forward-looking statements speak only as of
the date of this release. Liberty Global expressly disclaims any
obligation or undertaking to disseminate any updates or revisions
to UPC Switzerland’s 2019 estimated adjusted Segment OCF and OFCF
or any other forward-looking statement contained herein to reflect
any change in Liberty Global’s expectations with regard thereto or
any change in events, conditions or circumstances on which any such
statement is based.
ABOUT LIBERTY GLOBAL
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is the world’s
largest international TV and broadband company, with operations in
10 European countries under the consumer brands Virgin Media,
Unitymedia, Telenet and UPC. We invest in the infrastructure and
digital platforms that empower our customers to make the most of
the video, internet and communications revolution. Our substantial
scale and commitment to innovation enable us to develop
market-leading products delivered through next-generation networks
that connect 21 million customers subscribing to 45 million TV,
broadband internet and telephony services. We also serve 6 million
mobile subscribers and offer WiFi service through 12 million access
points across our footprint.
In addition, Liberty Global owns 50% of VodafoneZiggo, a joint
venture in the Netherlands with 4 million customers subscribing to
10 million fixed-line and 5 million mobile services, as well as
significant investments in ITV, All3Media, ITI Neovision,
LionsGate, the Formula E racing series and several regional sports
networks.
For more information, please visit www.libertyglobal.com.
____________________
1 Convenience translation based on USD/CHF spot rate of
1.00. 2 For the purpose of the sale price multiple calculation, the
estimated 2019 Segment OCF of UPC Switzerland has been reduced by
CHF 32 million, which represents the allocable estimated net amount
of transitional services (excluding amounts related to costs
expected to be capitalized by Liberty Global) to be provided by
Liberty Global to Sunrise during the first year following
completion of the transaction. 3 Net cash proceeds represent the
estimated cash proceeds to be received by Liberty Global after
adjustments for certain debt items, including vendor financing and
capital leases, based on December 31, 2018 balances. 4 UPC
Switzerland is part of the UPC Holding borrowing group. As the
transaction is structured, a change of control will not be
triggered under the Notes. The UPC Holding borrowing group’s
existing Term Loan AR (approximately $1.6 billion at December 31,
2018) is expected to be repaid in full at or prior to closing. The
amount of the repayment is not included in the determination of net
proceeds, as disclosed herein. 5 OFCF is defined as Segment OCF
less property and equipment additions, as customarily defined by
Liberty Global. For the purpose of the sale price multiple
calculation, UPC Switzerland’s estimated 2019 Segment OCF has been
adjusted as described in footnote 2, and its estimated 2019
property and equipment additions have been increased by CHF 62
million, which represents the estimated incremental net amount of
transitional services related to property and equipment additions
that UPC Switzerland would incur if it were a stand-alone entity.
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version on businesswire.com: https://www.businesswire.com/news/home/20190227005854/en/
Liberty Global plcInvestor Relations:Matt Coates,
+44 20 8483 6333John Rea, +1 303 220 4238Stefan Halters, +1 303 784
4528Corporate Communications:Molly Bruce, +1 303 220
4202Matt Beake, +44 20 8483 6428
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