Sunrise cancels extraordinary general meeting on UPC acquisition

A majority of shareholders do not support the capital increase to finance the 6.3 billion acquisition of UPC - Sunrise therefore cancels the planned Extraordinary General Meeting (EGM) on Wednesday at the last minute.

Editorial - October 22, 2019

The AGM was planned in order to carry out an ordinary capital increase of CHF 2.8 billion. This would have been used to purchase UPC Switzerland. The approval of the capital increase was the final condition for the purchase. According to Sunrise, the share purchase agreement has a "long-stop" date of February 27, 2020 and will remain in force until terminated by either party.

Based on clear indications from shareholders and Freenet's announcement to vote against the capital increase at the AGM, the Board of Directors of Sunrise has come to the conclusion that the clear majority of shareholders who registered their shares for voting at the AGM do not support the capital increase, Sunrise writes in a press release on Tuesday morning.

The spokesperson for the resistance was the major German shareholder Freenet, which owns 24.5 percent of Sunrise. Freenet CEO Christoph Vilanek criticized the purchase price and the necessary capital increase of CHF 2.8 billion as being too high. The structure of the deal is also disadvantageous for Sunrise shareholders. In addition, he no longer sees the strategic sense of the takeover. Because of the new 5G generation of mobile communications, it is not worth buying the UPC cable network for so much money. Spending CHF 6.3 billion on it is "madness". The activist shareholder Active Ownership Capital (AOC) sounded the same note.

Unexpected recommendation

It was unexpected that the influential voting rights consultant ISS joined the "no" camp. For the NZZ a trend-setting development, as some institutional investors follow ISS's recommendations almost blindly. The report also contained gross factual errors and was subsequently corrected.

Peter Kurer, Chairman of the Board of Directors of Sunrise, explains: "We regret the cancellation of the AGV. We have invested a lot of time in discussions with our shareholders and remain convinced of the strategic and financial reasons for the takeover".

Possible consequences for Sunrise and consumers

Most media and commentators agree: With the cancellation of the AGV, the deal between Sunrise and UPC is off the table. Tagesanzeiger.ch points out that Sunrise could now lose CEO Olaf Swantee, as he had indicated in advance that he would resign if the shareholders did not follow the takeover course. The failed deal also has consequences for consumers: They will now be deprived of a powerful new provider that could have seriously challenged the undisputed market leader Swisscom for the first time since the liberalization of the telecommunications market. (hae/SDA)

Sunrise and UPC - Chronicle of a failed deal:

Sunrise cancels extraordinary general meeting on UPC acquisition

A majority of shareholders do not support the capital increase to finance the 6.3 billion acquisition of UPC - Sunrise therefore cancels the planned Extraordinary General Meeting (EGM) on Wednesday at the last minute.

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