Sunrise's plan to takeover UPC is looking shaky, according to a report on Swiss newspaper Handelszeitung's website. Germany company Freenet, which holds 25 percent of Sunrise, has opposed the deal from the very start, it said. Opposition could grow, depending on how UPC’s and Sunrise's half-year results turn out.
Handelszeitung cited Freenet CEO Christoph Vilanek as telling it that as early as 24 January, he had made it clear to the relevant executives at Sunrise that Freenet could not approve of the deal in that form, with the finance logic it was using.
At a Sunrise board meeting on 27 February, Vilanet voted against the takeover, he told Handelszeitung. The newspaper said Sunrise spokeswoman Therese Wenger declined to confirm that he had done so, saying the company could not comment on the way individual board members had voted.
In June, Reuters had cited insiders as saying that Freenet had originally agreed to the takeover but Vilanek said it was untrue that it had changed its mind from one day to the next.
Vilanek told Handelszeitung that the half-year results of Sunrise (22 August) and UPC (07 August) will be decisive as far as he is concerned. If UPC fares worse than expected, then opposition to the deal could increase further, said the newspaper, as there is no provision for a price adjustment in the contract between UPC parent Liberty Global and Sunrise.
The Swiss market has changed since the beginning of the year and will continue to do so before the EGM, he said. There is at least two-and-a-half months to form an opinion, said Vilanek. Handelszeitung does not expect the EGM to take place before the end of October. It speculated that given average voting participation at a Sunrise general meeting, Freenet could muster 30-40 percent of the votes. Only two or three institutional investors would need to oppose the takeover.
Handelszeitung said the Sunrise has taken pains to depict Freenet as a self-serving speculator. It said Sunrise has hired an external PR agency to praise the takeover. The aim is to suggest Freenet is trying to forge a premium for its 25 percent stake.
Vilanek rejected Wenger's claim that Freenet is a financial investor rather than a strategic shareholder. He said the company has been active in telecoms for 25 years and is interested in Sunrise’s long-term well-being. Wenger, however, said Swiss market consolidation was one of the investment hypotheses from which Freenet wanted to benefit. She is confident that the deal will go through, saying that investors who oppose the deal have already sold their shares.
Handelszeitung said those involved expect competition authority Weko not to oppose the deal once it has completed its in-depth examination.
