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Aug. 12, 2020, 12:59 p.m. EDT

‘Cable Cowboy’ John Malone’s Liberty Global lassos Sunrise Communications in $7.4 billion deal

Liberty Global could consider IPO of Sunrise Communications in the future

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By Lina Saigol


Supplied by the company
Mike Fries, Liberty Global Chief Executive.

Shares in Sunrise Communications soared more than 26% on Wednesday, to hit a record high after John Malone’s Liberty Global launched an all-cash takeover offer for the Swiss telecoms business in a deal valued at SFr6.8 billion ($7.4 billion), including debt.

Denver-based Liberty Global /zigman2/quotes/205000522/composite LBTYA +1.24%  will pay SFr110 to acquire Sunrise /zigman2/quotes/208115152/delayed CH:SRCG +0.09% , representing a 28% premium to the Swiss telecom company’s closing share price of CHF86.20 on Tuesday. The deal will be funded from Liberty Global’s cash reserves and debt.

Mike Fries, Liberty Global Chief Executive, said the takeover of Sunrise would create a competitor to incumbent player state-controlled telecoms group Swisscom /zigman2/quotes/200337988/delayed CH:SCMN -0.88% .

He said Liberty Global would consider a /zigman2/quotes/208115152/delayed CH:SRCG +0.09% flotation of Sunrise in the future, once the takeover is completed and the operations are running smoothly and some synergies have been realized.

“I think that is a very good chance of happening. We don’t have a problem with publicly listed companies. Our operating company in Belgium is a publicly listed company, of course,” Fries said, adding that Swiss investors generally are attracted to local companies, especially in the telecom space, which have strong and sustainable cash flows.

Shares in Sunrise Communications were trading almost 26% higher to 108.6 francs in early morning European trading.

The combined business would have SFr3.17 billion in revenue, 2.1 million mobile postpaid subscribers, 1.2 million broadband subscribers and 1.3 million television subscribers, reflecting approximately 30% market share in each segment, Liberty Global said.

“The industrial logic of this merger is undeniable,” Fries said.

The takeover comes less than a year after Denver-based Liberty Global was forced to scrap the attempted $6.4 billion sale of its Swiss cable business UPC to Sunrise Communications Group after Germany’s Freenet — Sunrise’s biggest shareholder, with 24% of the stock — and influential proxy adviser Institutional Shareholder Services, opposed the deal.

Freenet /zigman2/quotes/207604963/delayed DE:FNTN -0.34%  is backing the sale of Sunrise to Liberty Global.

Liberty’s billionaire chairman Malone has been on an mergers and acquisitions spree since the late 1990s, earning him the “Cable Cowboy” moniker. The group has carried out more than 370 transactions since 2005.

The group built up a $12 billion cash acquisition war chest in 2018, after selling its German and Eastern European cable assets to Vodafone Group /zigman2/quotes/202484985/delayed UK:VOD -0.04% for $21.8 billion.

Read: Liberty Global and Telefónica Plan $38 Billion Telecom Merger in U.K.

In May, Virgin Media, the U.K. cable operator owned by Liberty Global, agreed a $31 billion merger with Spanish telecom group Telefónica’s /zigman2/quotes/200416613/delayed ES:TEF -0.54%  British mobile company 02. The combined group will have 46 million customers and £11 billion in revenue, and will challenge BT /zigman2/quotes/209006687/delayed UK:BT.A -1.31%  and Sky by offering consumers competitive bundles of television, mobile and broadband packages.

Even after the Sunrise takeover, Liberty Global will have approximately $7 billion of liquidity “to drive value-creation for shareholders,” the company said.

/zigman2/quotes/205000522/composite
US : U.S.: Nasdaq
$ 20.83
+0.26 +1.24%
Volume: 1.19M
Sept. 25, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$12.23 billion
Rev. per Employee
$449,545
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/zigman2/quotes/208115152/delayed
CH : Switzerland: SWX
CHF 108.90
+0.10 +0.09%
Volume: 230,513
Sept. 25, 2020 5:30p
P/E Ratio
129.80
Dividend Yield
4.04%
Market Cap
CHF4.93 billion
Rev. per Employee
CHF1.12M
loading...
/zigman2/quotes/200337988/delayed
CH : Switzerland: SWX
CHF 494.00
-4.40 -0.88%
Volume: 99,207
Sept. 25, 2020 5:30p
P/E Ratio
15.21
Dividend Yield
4.45%
Market Cap
CHF25.59 billion
Rev. per Employee
CHF590,275
loading...
/zigman2/quotes/208115152/delayed
CH : Switzerland: SWX
CHF 108.90
+0.10 +0.09%
Volume: 230,513
Sept. 25, 2020 5:30p
P/E Ratio
129.80
Dividend Yield
4.04%
Market Cap
CHF4.93 billion
Rev. per Employee
CHF1.12M
loading...
/zigman2/quotes/207604963/delayed
DE : Germany: Frankfurt
17.56
-0.06 -0.34%
Volume: 2,440
Sept. 25, 2020 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€704,474
loading...
/zigman2/quotes/202484985/delayed
UK : U.K.: London
103.80 p
-0.04 -0.04%
Volume: 43.29M
Sept. 25, 2020 4:35p
P/E Ratio
N/A
Dividend Yield
7.59%
Market Cap
£27.85 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/200416613/delayed
ES : Spain: Madrid
2.96
-0.02 -0.54%
Volume: 21.19M
Sept. 25, 2020 5:38p
P/E Ratio
N/A
Dividend Yield
10.95%
Market Cap
€15.54 billion
Rev. per Employee
€396,788
loading...
/zigman2/quotes/209006687/delayed
UK : U.K.: London
98.94 p
-1.31 -1.31%
Volume: 24.28M
Sept. 25, 2020 4:35p
P/E Ratio
5.69
Dividend Yield
0.00%
Market Cap
£9.80 billion
Rev. per Employee
N/A
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Lina Saigol is the London-based head of corporate news in the Europe, Middle East and Africa regions for MarketWatch and Barron’s Group.

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