freenet AG welcomes ISS' recommendation that Sunrise shareholders should vote AGAINST the proposed acquisition of UPC Switzerland
Büdelsdorf, 11 October 2019 - freenet AG ("freenet") [ISIN DE000A0Z2ZZ5] welcomes the recommendation from Institutional Shareholder Services ("ISS"), the leading independent proxy advisory firm, that shareholders should vote AGAINST the proposed capital increase and the acquisition of UPC Switzerland ("UPC") by Sunrise Communication Group AG ("Sunrise").
freenet has previously voiced its concerns about the all-cash structure of the proposed UPC acquisition to the Board of Directors of Sunrise from the outset, and has remained consistent in its view throughout. The proposed transaction is expensive and given the cable industry's as well as UPC's challenges, Sunrise shareholders will pay too much for UPC. It will destroy shareholder value. The proposed acquisition of UPC is clearly not in the best interests of Sunrise and its shareholders and therefore should be rejected at the EGM on 23 October 2019.
freenet is pleased that ISS as an independent body agrees with the views freenet has expressed about the proposed acquisition, which freenet believes would result in significant value destruction for all existing Sunrise shareholders.
Key Quotes from the ISS Report:
- "The main point of contention in this deal is valuation. [.] Our valuation analysis suggests a fair value range of CHF 4.6-5.2 billion (Enterprise Value) for UPC [.]. The transaction consideration of CHF 6.3 billion appears excessive considering UPC's operational issue."
- "Sunrise appears to be overpaying for assets in a transaction that appears to have debatable long-term strategic merit."
- "[.] the benefits of the proposed deal are less obvious, as cable's competitiveness vis-à-vis fibre and 5G is questionable."
- "The initial market reaction on announcement was decidedly negative, [.] such a reaction is arguably not atypical for a deal of this size. The clear pattern and magnitude of the share price [.] is more unusual."
For the reasons outlined above and in a recent freenet letter to Sunrise shareholders, freenet reiterates its intention to vote AGAINST the proposed acquisition and the corresponding capital increase at the EGM on 23 October 2019.
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Dokumenttitel: freenet AG welcomes ISS recommendation
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