Strategic Combination of UPC Switzerland and Sunrise to
Create the Leading Fixed-Mobile Challenger in Switzerland
Tender Offer is Unanimously Recommended by Sunrise Board of
Directors; Freenet, its 24% Shareholder, has Agreed to Tender its
Shares
Liberty Global (Nasdaq: LBTYA, LBTYB and LBTYK) announced today
that, pursuant to the terms of a transaction agreement between
Liberty Global and Sunrise Communications Group AG (SIX Swiss
Exchange: SRCG), Liberty Global has agreed to make an all cash
public tender offer for all publicly held shares of Sunrise at a
price of CHF110 per share. The offer represents a 32% premium to
the 60-day volume weighted average price (“VWAP”) per share of
CHF83.17 during the period up to (and including) August 11, 2020
and values 100% of Sunrise’s equity at CHF5.0 billion1,
representing a total enterprise value of CHF6.8 billion2.
Key Transaction
Highlights
- All-cash tender offer for 100% of the
publicly held shares of Sunrise Communications Group AG
(“Sunrise”) at a price of CHF110 per share, funded through a
combination of Liberty Global’s existing cash, expected to be
approximately CHF3.5 billion, and proceeds from new debt
issuance.
- Sunrise's Board of Directors is
unanimously recommending that its shareholders accept
the offer; Freenet AG, Sunrise’s largest shareholder, which holds
approximately 24% of Sunrise’s capital, has signed a binding,
unconditional commitment to tender its shares at the offer
price.
- Transaction price is underpinned by
significant expected total synergies of CHF3.1 billion
on a net present value basis after integration costs, with the
annual run rate of cost, capex and revenue synergies estimated at
CHF275 million. The vast majority of the benefits (approximately
CHF2.6 billion) relate to low risk cost and capital expenditure
synergies.
- Attractive acquisition valuation3 for
both parties representing 7.5x adjusted EBITDA4 and
10.3x adjusted OpFCF5 after taking into consideration revenue, cost
and capital expenditure synergies (net of upgrade costs)6, or 10.0x
adjusted EBITDA and 17.6x adjusted OpFCF before synergies.
- The tender offer is expected to
commence by the end of August with publication of an
offer prospectus; closing of the transaction will occur following
receipt of requisite regulatory approvals, which the parties expect
to receive around year end, and satisfaction of other customary
closing conditions as further indicated in the pre-announcement
published concurrently with this press release.
Strategic Benefits for Consumers
and Shareholders
- Combination will create the leading
national converged challenger in Switzerland. Together,
the combined business would have CHF3.17 billion in revenue, 2.1
million mobile post-paid subscribers, 1.2 million broadband
subscribers and 1.3 million TV subscribers, reflecting
approximately 30% market share in each segment.
- Greater scope for investment in
next-generation network and product innovation. After a
full acquisition of Sunrise, the combined business will be strongly
positioned to continue its network roll-out including 5G and future
technologies, supporting a range of new and enhanced products and
services. The integration of UPC’s gigabit network, covering around
75% of homes, with Sunrise’s existing FTTH partnerships covering
over 30% of homes, will ensure that 90% of Swiss households have
access to 1 gigabit broadband speeds by 2021, with a clear roadmap
to enable up to 10Gbps over time. In addition, UPC Switzerland’s
extensive fibre backbone will further strengthen Sunrise's
leadership position in both 4G and 5G.
- Differentiated, converged offers for
customers. Sunrise is recognized as having best-in-class
mobile infrastructure, while also building a meaningful customer
base in broadband and TV. UPC Switzerland is the country’s leading
provider of gigabit broadband, and offers the best video platform
with features such as voice control, 4K, full content offerings and
best in-class TV apps. As a fully converged provider, the combined
business will be well positioned to compete in the Swiss market,
accelerating the sale of converged fixed-mobile services to
existing customers and new services using the best of each
company’s product portfolios, skills and networks.
- Strengthened B2B platform.
UPC Switzerland’s growing B2B business (#2 behind Swisscom on
fixed) will benefit from the enhanced scale delivered by Sunrise’s
customer base, increasing the ability to cross-sell converged
mobile and fixed products and deliver a stronger customer
experience.
- Value-enhancing transaction for
Liberty Global shareholders. The transaction is
consistent with Liberty Global’s strategy to create converged,
national champions across its core European markets. It represents
an attractive opportunity to deploy existing cash to unlock
substantial synergies and sustainable free cash flow growth in a
market where Liberty Global has invested for fifteen years.
Mike Fries, CEO of Liberty Global, added “The industrial logic
of this merger is undeniable, but the real winners are Swiss
consumers and businesses. This powerful combination of 5G wireless
and gigabit broadband will accelerate digital investment at a time
when connectivity has never been more essential. Fixed-mobile
convergence is the future of the telecom sector in Europe, and now
Switzerland will have a true national challenger to drive
competition and innovation for years to come. We look forward to
welcoming Sunrise employees to the Liberty and UPC family and
congratulate them and the board on their success.”
He continued, “This transaction is another significant step on
our path to create fixed-mobile champions in all of our core
markets, crystallizing the value of our superior broadband networks
and driving long-term, sustainable free cash flow growth. Even
after this deal, and assuming completion of our recently announced
UK transaction, we will continue to have approximately $7 billion
of liquidity8 to drive value-creation for shareholders.”
Further Details
Under the terms of a transaction agreement between Liberty
Global and Sunrise, Liberty Global has published a pre-announcement
today for an all cash public tender offer for all publicly held
shares of Sunrise at a price of CHF110 per share.
Liberty Global plans to fund the transaction through a
combination of approximately CHF3.5 billion of cash from its
balance sheet and approximately CHF3.2 billion of financing, of
which CHF1.6 billion will be available to refinance existing
indebtedness of Sunrise as needed. Upon becoming a wholly-owned
subsidiary of Liberty Global, Sunrise will become part of the UPC
credit pool. Targeted leverage for this pool will be 5.0x, pro
forma for this transaction, including vendor financing and
leases.
To find out more and to follow our progress, visit
www.nationalconnectivitychallenger.ch
Indicative Timetable
The offer by Liberty Global is conditioned upon at least
two-thirds of all Sunrise shares on a fully diluted basis tendering
into the offer at the end of the offer period and other customary
offer conditions, including regulatory approvals as set out in the
pre-announcement.
The tender offer is expected to be launched by the end of August
and will remain open for a minimum of twenty SIX Swiss Exchange
(“SIX”) trading days following a ten trading-day cooling-off period
under Swiss takeover law. After this period (and subject to
extensions) and if the minimum acceptance threshold was reached or
waived, there will be an additional acceptance period of ten SIX
trading days. Thereafter, the tender offer will end but the
transaction will remain subject to Swiss regulatory approval prior
to closing. A pre-announcement, including the detailed conditions
of the tender offer, is being published concurrently with this
press release and a formal tender offer prospectus will be
published to launch of the tender offer.
After completion of a successful offer, Liberty Global intends
to initiate a squeeze-out procedure and delist Sunrise shares from
trading on the SIX. Sunrise is therefore expected to become a
wholly-owned subsidiary within the Liberty Global group of
companies.
In connection with the transaction, Credit Suisse International,
J.P. Morgan and LionTree Advisors are acting as financial advisers
to Liberty Global, and Homburger AG and Shearman & Sterling LLP
are acting as legal advisers to Liberty Global.
ABOUT LIBERTY GLOBAL
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is one of the
world’s leading converged video, broadband and communications
companies, with operations in 6 European countries under the
consumer brands Virgin Media, Telenet and UPC. We invest in the
infrastructure and digital platforms that empower our customers to
make the most of the digital revolution.
Our substantial scale and commitment to innovation enable us to
develop market-leading products delivered through next-generation
networks that connect 11 million customers subscribing to 25
million TV, broadband internet and telephony services. We also
serve 6 million mobile subscribers and offer WiFi service through
millions of 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.
Important Additional
Information
The tender offer described herein (the Offer) has not yet
commenced. This release is for informational purposes only and does
not constitute, or form part of, any offer or invitation to sell or
issue, or any solicitation of any offer, to purchase or subscribe
for any registered shares in Sunrise or Sunrise's ADSs, nor shall
it form the basis of, or be relied on in connection with, any
contract therefor. At the time the Offer is commenced, shareholders
of Sunrise are urged to read the Offer documents, which are or will
be available at www.nationalconnectivitychallenger.ch.
U.S. shareholders of Sunrise may also call +1 303 220 6600 (US)
or email ir@LibertyGlobal.com to request a copy of the offer
documents, which will be provided free of charge upon request.
Sunrise is incorporated in Switzerland and listed on the SIX Swiss
Exchange (“SIX”), and any offer for its securities will be subject
to Swiss disclosure and procedural requirements, which differ from
those that are applicable to offers conducted solely in the United
States. The transactions described above will be structured to
comply with securities laws and regulations applicable to
transactions of this type. The communication is not being made by,
and has not been approved by, an “authorised person” for the
purposes of Section 21 of the U.K. Financial Services and Markets
Act 2000.
Offer Restrictions
The Offer will not be made, directly or indirectly, in any
country or jurisdiction in which it would be considered unlawful or
otherwise violate any applicable laws or regulations, or which
would require Liberty Global or any of its subsidiaries to change
or amend the terms or conditions of the Offer in any material way,
to make an additional filing with any governmental, regulatory or
other authority or take additional action in relation to the Offer.
It is not intended to extend the Offer to any such country or
jurisdiction. Any such documents relating to the Offer must neither
be distributed in any such country or jurisdiction nor be sent into
such country or jurisdiction, and must not be used for the purpose
of soliciting the purchase of securities of Sunrise by any person
or entity resident or incorporated in any such country or
jurisdiction.
The Offer will be made in the U.S. pursuant to Section 14(e) of,
and Regulation 14E under, the U.S. Securities Exchange Act of 1934,
as amended (the U.S. Exchange Act), subject to the exemptions
provided by Rule 14d-1 and Rule 14e-5 under the U.S. Exchange Act
and any exemptions from such requirements granted by the U.S.
Securities and Exchange Commission, and otherwise in accordance
with the requirements of Swiss law.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. In this context, forward-looking statements often address
expected future business and financial performance and financial
condition, and often contain words such as “expect,” “anticipate,”
“intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,”
“target,” and similar expressions and variations or negatives of
these words. These forward-looking statements may include, among
other things, statements relating to the outlook in Switzerland of
Sunrise and Liberty Global; operational expectations, including
with respect to the development, launch and benefits of innovative
and advanced products and services, including gigabit speeds, new
technology and next generation platform rollouts or launches;
future growth prospects and opportunities, results of operations,
uses of cash, tax rates, and other measures that may impact the
financial performance of the companies; anticipated benefits and
synergies and estimated costs of the proposed transaction; the
expected timing of completion of the proposed transaction; and
other information and statements that are not historical facts.
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 events that are outside of the control of
the parties, such as: (i) Sunrise, Liberty Global, and our
respective operating companies’ ability to meet challenges from
competition and to achieve forecasted financial and operating
targets; (ii) the effects of changes in laws or regulations; (iii)
general economic, legislative, political and regulatory factors,
and the impact of weather conditions, natural disasters, or any
epidemic, pandemic or disease outbreak (including COVID-19); (iv)
Sunrise, Liberty Global, and our respective affiliates’ ability to
obtain regulatory approvals and satisfy other conditions to the
consummation of the proposed transaction; (v) the proposed
transaction may not be completed on anticipated terms and timing or
completed at all; (vi) Liberty Global and our affiliates’ ability
to successfully integrate Sunrise and realize anticipated
efficiencies and synergies from the proposed transaction; (vii) the
outcome of any potential litigation that may be instituted with
respect to the proposed transaction; (viii) the potential impact of
unforeseen liabilities, future capital expenditures, revenues,
expenses, economic performance, indebtedness, financial condition
on the future prospects and business of Sunrise and Liberty
Global’s Swiss business after the consummation of the proposed
transaction; (ix) any negative effects of the announcement,
pendency or consummation of the proposed transaction; and (x)
management’s response to any of the aforementioned factors. For
additional information on identifying factors that may cause actual
results to vary materially from those stated in forward-looking
statements, please see Liberty Global’s filings with the U.S.
Securities and Exchange Commission, including Liberty Global’s most
recently filed Form 10-Q. These forward-looking statements speak
only as of the date of this release. Sunrise and Liberty Global
expressly disclaim any obligation or undertaking to disseminate any
updates or revisions to any forward-looking statement contained
herein to reflect any change in expectations with regard thereto or
any change in events, conditions or circumstances on which any such
statement is based.
1 Based on a fully diluted number of shares of 45.4 million as
of June 30, 2020
2 As reported by Sunrise under International Financial Reporting
Standards (“IFRS”). Based on net indebtedness as of March 31, 2020,
including operating leases, of CHF1.8BN. Cash balance is adjusted
for Sunrise dividend paid out in April 2020
3 All valuation metrics are based on an offer price of CHF110
per share
4 Based on the low end of the 2020 Sunrise Adjusted EBITDA
guidance range under Sunrise’s definitions as reported under
IFRS
5 Based on the low end of the 2020 Sunrise Adjusted EBITDA
guidance range under Sunrise’s definitions as reported under IFRS.
Capital expenditure figure represents the mid-point of Sunrise’s
2020 capital expenditure guidance range adjusted for CHF140 million
of capital expenditures considered non-recurring upgrade capital
expenditures, as defined by Sunrise
6 Pro forma for CHF275 million run-rate synergies comprising of
CHF46 million of revenue, CHF187 million of cost and CHF42 million
of capital expenditures
7 Based on Sunrise’s revenue for the year ended December 31,
2019 as reported under IFRS plus the revenue of Liberty Global’s
Swiss business for the year ended December 31, 2019, as reported
under generally accepted accounting principles in the United States
(“U.S. GAAP”). Liberty Global’s assessment of acquisition
accounting impacts and differences between IFRS and U.S. GAAP on
Sunrise’s revenue has not been completed
8 Reflects June 30, 2020 liquidity as adjusted to include the
anticipated proceeds to be received at closing related to our
pending joint venture with Telefonica in the U.K., and to remove
the June 30, 2020 unused borrowing capacity in the Virgin Media
borrowing group.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200811005891/en/
Investor Relations: Max Adkins +44 20 8483 6336 John Rea
+1 303 220 4238 Stefan Halters +44 20 8483 6211
Corporate Communications: Molly Bruce +1 303 220 4202
Matt Beake +44 20 8483 6428
Liberty Global (NASDAQ:LBTYA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Liberty Global (NASDAQ:LBTYA)
Historical Stock Chart
From Apr 2023 to Apr 2024