The plans of billionaire cable mogul John Malone — who owns Virgin Media cable and broadband, as well as hotels in Ireland — for a $6.4bn (€5.7bn) sale of UPC Switzerland fell apart after would-be purchaser Sunrise Communications concluded its shareholders won’t support the move.
Sunrise chief executive Olaf Swantee said in an interview that the deal was “dead”.
The company had earlier called off a shareholder vote on a rights offering to fund the purchase. UPC parent Liberty Global has yet to say it has walked away.
Liberty Global chairman Mr Malone had agreed in February to sell the unit, raising the prospect that he would rake in a heftier cash pile to support a range of activities, including potential shareholder payouts and acquisitions in western Europe. But Freenet, Sunrise’s biggest investor, railed against the purchase price and an influential proxy adviser came out against the deal, wiping out the possibility of success.
This is the second setback this year for the man who sold cable provider Tele-Communications to AT&T Inc. for $48bn in 1999 -- his attempted purchase of Millicom Cellular fell apart in January on price concerns. Liberty Global shareholders may also need to recalibrate their expectations for the prices they can expect for future transactions.
“Malone’s not had many failures in his career and this is a reputational setback if nothing else,” said Mirabaud analyst Neil Campling. “Liberty Global may have to reset some of its ambitions around the values it can achieve for future M&A.”
The transaction valued UPC at 10 times adjusted earnings before interest, taxation, depreciation, and amortisation, and Sunrise had agreed to finance the deal through a mix of debt and money raised from a rights issue. Freenet balked at this mix. Eventually the rights issue was cut back, and last week Liberty Global pledged to support the capital increase.
These changes weren’t enough to earn the approval of proxy advisor Institutional Shareholder Services.
Liberty Global is still examining its options within the current share purchase agreement, said a spokesman for the company.
An attempt by Liberty Latin America to take over Millicom for $7.6bn in cash and stock fell through after the target’s executives were said to have demanded changes to the terms of the transaction, including a higher premium and cash component.