Operator Sunrise terminated a bid to acquire cable provider UPC Switzerland from Liberty Global following pressure from a major shareholder, triggering the payment of a CHF50 million ($51 million) compensation fee and incurring additional costs of up to CHF75 million.
In its Q3 financial update, Sunrise confirmed it had walked away from the share purchase agreement (SPA) struck in February. It expects to take a hit of between CHF70 and CHF75 million consisting of underwriting fees; legal charges; operating expenses; and already incurred integration costs. This is in addition to compensation due to be paid to Liberty Global.
The make-up of the agreement and valuation of UPC Switzerland had been severely criticised by Sunrise’s largest shareholder Freenet, which had threatened to scupper the CHF6.3 billion deal at an extraordinary general meeting (EGM) scheduled to approve measures to finance the deal.
On the eve of the EGM the meeting was cancelled, casting doubt on the future of the transaction.
The proposal had been vehemently defended by senior executives at the operator throughout the process.
Responding to Sunrise’s termination of the agreement, Liberty Global CEO Mike Fries said: “While we would have preferred to keep the current SPA in place, we understand this move by Sunrise. The Sunrise board has been navigating a difficult situation.”
“We look forward to continuing our conversations with either the board or Freenet about a potential transaction that creates significant value for both sets of shareholders and Swiss consumers.”