Liberty Global plc (“Liberty Global”) (NASDAQ: LBTYA, LBTYB and LBTYK) and Sunrise Communications AG (“Sunrise”) have announced an agreement whereby Liberty Global will support Sunrise´s rights offering related to the acquisition of UPC Switzerland, the companies said.
Liberty Global has agreed to support the Sunrise rights offering up to an aggregate amount of CHF 500 million2 through the purchase of tradeable subscription rights at market prices and the subsequent purchase of newly issued shares, if any, in the rights offering. If fully utilized, Liberty Global´s resulting ownership would reach 7.8% at current market prices3. Sunrise and Liberty Global have also agreed that Liberty Global will receive one board seat nomination as long as its shareholding exceeds 5%. All other terms of the CHF 6.3 billion transaction remain unchanged.
Sunrise shareholders will vote to approve the relevant capital increase required to consummate the transaction on October 23rd. The Swiss regulatory authority, WEKO, approved the deal without conditions, citing the fact that it will create the second largest telecommunications carrier in Switzerland and that the combination will stimulate competition. Glass Lewis, Ethos, zRating, three proxy advisory firms, recommended Sunrise shareowners approve the capital increase.
Separately, ISS issued a flawed report recommending that Sunrise shareholders vote against the capital increase. While ISS found the combined entity “could reasonably provide a strategic advantage” over the near and medium term, it raised unfounded concerns about the long-term viability of UPC´s fiber-rich HFC networks versus emerging technologies and, among other errors, misstated both current and historical transaction multiples.
Liberty Global (NASDAQ: LBTYA, LBTYB and LBTYK) is one of the world´s converged video, broadband and communications companies, with operations in six European countries under the consumer brands Virgin Media, Telenet and UPC.