Freenet - Announces not satisfied with Sunrise's acquisition of UPC Switzerland for a purchase price of CHF6.3B; decided to vote against the proposed CHF4.1B capital increase of Sunrise Communications Group AG
freenet AG ("freenet") [ISIN DE000A0Z2ZZ5] announces its decision to vote against the CHF 4.1bn proposed capital increase of Sunrise Communications Group AG ("Sunrise") in relation to its envisaged acquisition of UPC Switzerland ("Transaction"), as the current terms of the transaction, in particular the purchase price, synergy allocation and the transaction structure are unbalanced and unfavorable for all Sunrise shareholders.
Sunrise announced on 27 February 2019 that it has signed a binding agreement to acquire the Swiss cable operator UPC Switzerland, a fully-owned subsidiary of Liberty Global, for an enterprise value of CHF 6.3bn paid in cash. As part of the Transaction financing, Sunrise envisages to undertake a rights issue to raise approx. CHF 4.1bn and will seek approval from its shareholders for this at an Extraordinary General Meeting, expected to be held in the second half of 2019.
The purchase price and implied valuation for UPC Switzerland is too high, in particular in light of the cable industry being under severe pressure and UPC Switzerland's operational performance (as further evidenced by its Q2'19 results). For a fair transaction for all Sunrise shareholders, the purchase price should be lowered.