Liberty Global takes over Switzerland’s Sunrise Communications in a $7.4 billion deal.
The all-cash $7.43 billion deal will see Liberty Global, set up by U.S. cable pioneer John Malone, pay 110 francs per share for Switzerland’s No. 2 telecoms company, a 32% premium to the company’s average share price over the past 60 days.
Sunrise’s bid to buy Liberty Global’s Swiss cable business UPC last year collapsed in the face of opposition from Sunrise’s biggest shareholder, Germany’s Freenet, and activist investors including Axxion and AOC, who balked at the price.
On Wednesday Freenet, which owns 24% of Sunrise, committed to tender its shares for Liberty Global’s bid.
“It’s a fair valuation,” Freenet CEO Christoph Vilanek told Reuters. “We believe that a merger of sensible terms makes sense.”
The deal, which is subject to regulatory approval, is the latest sign of consolidation in the telecom industry as companies try to cut costs and ramp up investments in technology.
Liberty Global said it approached Sunrise in July with the proposed offer and got a positive response.
“I’ve always said the market requires rationalization and we remain opportunistic about strategic developments there,” Liberty Global Chief Executive Mike Fries told reporters. “The industrial logic of this deal is undeniable.”
In Switzerland Sunrise and Liberty Global trail state-controlled Swisscom the dominant provider of internet, mobile phone and cable TV services.
Together, the combined business would have 3.17 billion Swiss francs in revenue, 2.1 million mobile subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers, reflecting approximately 30% market share in each segment, Liberty Global said.