Liberty Global offer for Sunrise

Offer

• Sunrise board & shareholder Freenet (24%) support
• 110 CHF/share cash (premium 28% to 200811, 32% over last 60 days average)
• Tender to start end Aug 2020 for 40 business days
• Unconditional on reaching two-thirds, to squeeze out minorities & delist, expects approval end 2020
• To be financed from cash (CHF 3.5b) & new debt (CHF 3.2b o/w 1.6b for refinancing Sunrise debt)
• Break-up fee CHF 50m for Sunrise

Valuation

• Equity CHF 5.0b, EV CHF 6.8b
• 7.5x adj EBITDA or 10.3x adj OpFCF after synergies
• 10.0x adj EBITDA or 17.6x adj OpFCF before synergies

Synergies

• NPV after costs CHF 3.1b (o/w CHF 2.6b from low-risk cost & capex)
• Annual run rate from rev, costs, capex CHF 275m (46m from rev, 187m from opex, 42m from capex)

Pro forma combination

• >3500 employees
• Rev CHF 3.1b
• 2.1m postpaid subs, 1.2m BB subs, 1.3m TV subs, market share in each ~30%
• Target gigabit BB coverage 90% of HH by 2021 (UPC 75%, Sunrise 30%)
• To upgrade to 10 Gb/s over time
• UPC/Sunrise to become part of UPC credit pool, target leverage 5.0x
• May consider IPO of the merged business in the future

Quotes

• "attractive opportunity to deploy existing cash to unlock substantial synergies and sustainable free cash flow growth."
• “This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets"
• " ... after this deal, and assuming completion of our recently announced UK transaction, we will continue to have approximately $7 billion of liquidity to drive value-creation for shareholders."