Rumors that the UPC deal could work out after all are increasing

At the last second, Sunrise cancelled the extraordinary general meeting in October and thus the purchase of UPC (Werbewoche.ch reported). Major shareholder Freenet succeeded in mobilizing enough other shareholders against the purchase - the Sunrise Board of Directors thus gave up, as the capital increase required for the purchase would have been voted against at the Annual General Meeting anyway.

Even though the general opinion afterwards was that the deal was finally history and there was already speculation about Salt as a possible alternative buyer: The rumors that it could still work out with Sunrise and UPC increased only a few days later. (Werbewoche.ch reported).

Amendment could get deal rolling again

These rumors are now getting new breeding ground. How the SonntagsZeitung writes in the current issue, the purchase could come about after all. This could be made possible by additional articles to the existing purchase agreement, which Sunrise and UPC parent company Liberty Global have agreed on. The two parties added the amendments three days after the general meeting collapsed. According to the additional items, Liberty Global can demand another extraordinary general meeting from Sunrise - "no later than 30 calendar days after receipt of a written request".

How the SonntagsZeitung has learned, these amendments are fueling the fantasy among certain major investors, who thought the UPC takeover was good but too expensive, that the deal could still work out. In the scenario making the rounds in these circles, Liberty Global would have to make concessions: Instead of the 6.3 billion francs demanded, only 4.5 billion francs would now be due for UPC. The purchase price would thus be clearly aligned with the estimate of the voting rights advisor ISS, which puts the value of UPC at between CHF 4.6 billion and CHF 5.2 billion.

Liberty Global could become a major shareholder

Another part of the scenario would be that Sunrise Liberty Global would not be paid out entirely in cash, but also in shares. A capital increase would still be necessary to raise the billion-euro sum. Some of the newly created Sunrise shares would go to Liberty Global. The group would thus become a significant Sunrise shareholder and could benefit from the increase in value of the merged company. This point could make it interesting for Liberty Global to enter into the deal despite the lower sales price.

The data provided by the SonntagsZeitung insiders quoted also assume that Liberty Global would subsequently vote out Sunrise Chairman Peter Kurer and appoint its own people to the supervisory board.

Sunrise Board of Directors wants deal finally off the table

It would all happen pretty soon. As of Tuesday, Sunrise is empowered under the amendment to unilaterally terminate the purchase agreement - unless Liberty Global demands an extraordinary general meeting by midnight on Monday. If it does, Sunrise will not be allowed to withdraw from the agreement for 30 days. If the Sunrise board of directors had its way, however, the deal would be buried for good as soon as possible.

Liberty Global, on the other hand, is keeping mum about whether it plans to make a second attempt to sell UPC. Actually, they want to get rid of UPC in Switzerland. Apart from Sunrise, however, no one is interested in paying that much money, as the purchase would not open up any new synergies for normal investors. Sunrise, on the other hand, could become a serious challenger to Swisscom for the first time through the UPC cable network. Apart from Sunrise, only Salt would be a potential buyer in Switzerland for whom the acquisition would make sense. But Salt has not shown the slightest interest in UPC so far.