John Malone's international cable giant Liberty Global said on Wednesday that it has agreed to make an all-cash public tender offer for all publicly held shares of Swiss pay TV and telecom company Sunrise Communications in a 6.8 billion Swiss franc ($7.4 billion) deal.
The price tag puts a 32 percent premium on the no. 2 Swiss telecom firm’s average stock price over the past 60 days.
Last year, Sunrise tried to buy Liberty Global’s Swiss cable business UPC, but Sunrise’s largest shareholder, Germany’s Freenet, which holds a 24 percent stake, and activist investors opposed the deal. Freenet has signed "a binding, unconditional commitment to tender its shares at the offer price," Liberty Global said.
The deal "will create the leading national converged challenger in Switzerland," Liberty Global said. "Together, the combined business would have 3.1 billion Swiss franc ($3.4 billion) in revenue, 2.1 million mobile post-paid subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers, amounting to approximately 30 percent market share in each segment.
The company estimated 3.1 billion Swiss franc ($3.4 billion) in total synergies, led by cost and capital expenditure synergies.
The tender offer is expected to start by the end of August, with the deal close following regulatory approvals, which the parties expect to get around the end of the year. After the successful completion of the offer, Liberty Global said it plans to initiate a so-called "squeeze-out procedure" to force any remaining small shareholders to sell their stock in Sunrise and then delist Sunrise from trading on the Swiss stock exchange SIX.
"The transaction is consistent with Liberty Global’s strategy to create converged, national champions across its core European markets," the company said.
Said Mike Fries, CEO of Liberty Global: "The industrial logic of this merger is undeniable, but the real winners are Swiss consumers and businesses. This powerful combination of 5G wireless and gigabit broadband will accelerate digital investment at a time when connectivity has never been more essential."
He added: “This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets, crystallizing the value of our superior broadband networks and driving long-term, sustainable free cash flow growth."