Weko approves UPC takeover

The planned takeover aroused the interest of the Weko, which decided in June to examine the transaction in greater depth (Werbewoche.ch reported). Now this potential stumbling block has been removed. The Weko approves the takeover without conditions or requirements.

Sunrise sees this decision as confirmation of its own view that the transaction will give the company significant competitive advantages and make it an even stronger competitor. In addition to major cost savings, the transaction is expected to result in significant cross-selling potential, especially in the wholesale area. As a result, the transaction is also expected to create substantial value for its shareholders and secure Sunrise's long-term profitability.
 
"With the approval by the Weko, we have reached an important milestone on the way to New Sunrise. With the acquisition of UPC Switzerland by Sunrise, Switzerland gets the definitive challenger in the telecom market and a strong partner for business," says Olaf Swantee, CEO of Sunrise.
 
The regulatory hurdles for the closing of the transaction have thus been removed. The next step is now to pass a resolution on the required capital increase at the Annual General Meeting, which is expected to take place on October 23, 2019. However, various shareholders, including the largest Sunrise single shareholder Freenet, have spoken out against the UPC takeover (Werbewoche.ch reported). So not all hurdles have been cleared out of the way yet.

How the Handelszeitung writes in its current issue, Sunrise's main shareholder Freenet has once again spoken out against a reworking of the billion-dollar deal shortly before the Weko's decision. In addition, the German telecom provider says it no longer sees any industrial logic in the takeover of UPC. 

Freenet CEO and Sunrise board member Christoph Vilanek on the announcement by Sunrise CEO Olaf Swantee to change the capital structure of the deal: "We are disappointed by the timid approach; this is not a commitment to a fundamental change in strategy, but merely a fig leaf. The approach shows how nervous management is in view of the extraordinary general meeting." A higher debt ratio of up to four times the Ebitda of UPC-Sunrise, as reported among institutional investors, is certainly in line with Freenet's original demand. 

But the situation is no longer the same as when negotiations were formally concluded at the beginning of the year, says Vilanek: "The industrial logic for the UPC transaction no longer exists today. 5G is now a serious cable network replacement." At the time, he said, people simply underestimated the huge potential of fast mobile communications in indoor Internet use. "So Sunrise would be investing in an already obsolete technology if it took over UPC Switzerland." This would massively reduce the payback time of a planned ten years for the UPC network. "The deal is simply no longer profitable." (swi/pd)