Salt says it rebuffed Liberty Global prior to Sunrise deal
Xavier Niel’s Swiss telecoms group says the $7.4bn merger of rivals will cost it billions of francs
Salt Mobile, the Swiss mobile phone company owned by billionaire Xavier Niel, has said in a legal filing that it resisted a takeover approach from Liberty Global cable company in order not to breach an exclusivity agreement with rival Sunrise that subsequently agreed to sell itself to Liberty.
Salt said last week that it was considering legal action over the $7.4bn sale of Sunrise, its mobile rival, to John Malone’s Liberty Global after applying to the US courts to obtain documents related to the deal.
It argues that the sale appears to be in breach of an exclusive bilateral agreement between Salt and Sunrise to build a fibre optic network to compete with Swisscom and UPC, Liberty Global’s cable company in Switzerland.
Salt, in the application filed in the US District Court for the District of Colorado, said that Sunrise’s deal to sell to Liberty Global had caused it “significant harm and billions worth of Swiss francs of damages”. It said it intends to launch proceedings in the Zurich Commercial Court.
Sunrise has defended its position arguing that the exclusivity agreement with Salt excluded a tender offer and that it did not solicit a bid from Liberty Global so there are no grounds for any case.
Sunrise did not immediately comment on the claims made in the Salt filing. Liberty Global declined to comment.
The US filing sets out a timeline of events that reveals Liberty Global first approached Salt’s parent company NJJ Telecom over a potential deal in November 2019 after an attempt to sell UPC to Sunrise collapsed.
That did not lead to a firm offer and Salt subsequently signed an agreement with Sunrise in April to build a fibre optic broadband network called Swiss Open Fiber at a cost of €3bn.
Salt said that Liberty Global then approached NJJ to reopen talks over a potential acquisition but it did not engage because of the exclusivity deal with Sunrise related to the fibre network negotiations.
Sunrise then asked Salt to extend the exclusivity period, according to the filing. It cited an email from Marcel Huber, Sunrise’s general counsel, to an NJJ executive that called for the exclusivity period to be prolonged so that “the parties involved cannot conduct M&A talks with other network owners in Switzerland (including UPC) during the period of negotiation”.
That request was agreed on June 15, with the exclusivity agreement extended to October. However, on August 12, Sunrise recommended an offer pitched at SFr110 a share from Liberty Global.
Analysts argued that, while potential legal action could result in damages being paid to Salt, it is unlikely to derail the $7.4bn takeover.
Usman Ghazi, an analyst with Berenberg, said “This development does add an unexpected level of uncertainty to the Liberty Global bid for Sunrise. However, we note that Salt has filed proceedings to obtain information from Liberty Global, as opposed to seeking an injunction to block the transaction. Given that these proceedings typically take months, they are unlikely to interfere with the Liberty Global tender offer for Sunrise.”