Freenet rejects Liberty Global’s offer to take part in Sunrise-UPC Switzerland deal

Freenet, the largest shareholder in Sunrise, is still opposed to the Swiss service provider’s deal to buy Liberty Global’s UPC Switzerland, despite a new offer from the US seller to take part in the deal.

With Freenet vocally opposed to the deal for months, Liberty Global attempted to smooth things over by announcing an agreement to support the Sunrise rights offering up to an aggregate amount of CHF500 million (€458 million). This would be achieved through the purchase of tradeable subscription rights at market prices and the subsequent purchase of newly issued shares, if any, in the rights offering. 

The proposed offering would see Liberty Global’s resulting ownership reach 7.8% at current market prices. In addition, the agreement would see Liberty Global will receive one board seat nomination as long as its shareholding exceeds 5%. 

All other terms of the CHF6.3 billion (€5.67 billion) transaction remain unchanged.

Mike Fries, CEO of Liberty Global said: “We have always believed in the logic of this combination. It creates a national powerhouse that will provide a fully-converged challenger to Swisscom and represents a smart and accretive transaction for both Sunrise and Liberty shareholders.

“We are also happy to support the financing. Both investors and consumers win when this deal closes. Olaf and his team are excellent operators and are uniquely qualified to realize the strategic and financial benefits of the merger.”

However, Freenet has issued a statement that it is unmoved by these efforts. The company statement said: “The participation of Liberty Global changes nothing in our opinion or that of the majority of shareholders about the deal. We still think that it is not a good deal. Liberty Global has merely said it will participate at rock bottom prices with the money they will receive from a too expensive sale.”

Investors are due to vote on October 23 on a CHF2.8 billion (€2.56 billion) capital increase in order to help the purchase. In August, Freenet said that it would vote against any such increase.