Xavier Niel gets Salt-y over Liberty/Sunrise tie-up

French telco magnate Xavier Niel is mulling legal action to block UPC Switzerland's acquisition of Sunrise.

Nick Wood

August 28, 2020

2 Min Read
Xavier Niel gets Salt-y over Liberty/Sunrise tie-up

French telco magnate Xavier Niel is mulling legal action to block UPC Switzerland’s acquisition of Sunrise.

His Swiss unit, Salt Mobile, alleged this week that the proposed merger violates an exclusive agreement with Sunrise to jointly deploy fibre-to-the-home (FTTH) to 1.5 million premises. In a statement, Salt said it has brought in law firm Quinn Emanuel Urquhart & Sullivan, which in turn has made a filing in the US in hopes of obtaining information from UPC parent Liberty Global regarding its Sunrise bid.

Having tried unsuccessfully last year to sell UPC Switzerland to Sunrise for $6.3 billion, Liberty earlier in August tried it the other way round, launching a takeover bid worth $7.4 billion.

The first time round, Sunrise’s largest shareholder – German telco group Freenet – balked at the plan to fund the acquisition via a CHF2.8 billion rights issue, and so blocked the deal. Now that Sunrise is the takeover target, Freenet is a lot more amenable, and it has caused no small amount of bother for Salt.

“Unanimous Sunrise board approval for the deal and the irrevocable tender by Freenet of its 24.4 percent stake in Sunrise have already destroyed significant value for Salt and its shareholders,” Salt claimed on Thursday.

Sunrise CEO André Krause argued in a Financial Times report that his company’s exclusive deal with Salt does not apply if Sunrise becomes the subject of a public tender offer – an offer he claims Sunrise did not solicit.

Salt’s legal complaint was made the same day that Liberty Global published the prospectus for its CHF110 per-share cash offer for Sunrise. The offer period is expected to open on 11 September and is scheduled to expire on 8 October. Two-thirds of Sunrise’s shares need to be tendered during that time in order for the deal to go ahead. Subject to regulatory approvals, UPC and Sunrise aim to have the whole thing wrapped up by the end of 2020.

That moment can’t come quick enough for Liberty Global. UPC Switzerland – which is cableco with an MVNO arm – has been haemorrhaging customers for years. Although the losses have slowed in recent quarters, it continues to weigh on UPC’s top line.

Meanwhile, Sunrise – which generates the vast majority of its revenue from mobile services – has been on a steady upward trend when it comes to users. On Thursday it reported 8.1 percent year-on-year growth in postpaid subscribers during Q2, ending June with 1.96 million of them.

Combining its operations with UPC will give it much greater cross-selling opportunities – provided Salt’s opposition doesn’t throw a spanner in the works, of course.

About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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