ZURICH (Reuters) - Sunrise Communications’ top shareholder, German telecoms group Freenet, needs time to decide whether to support the Swiss group’s plans to buy Liberty Global’s Swiss UPC cable business, Freenet CEO Christoph Vilanek told Reuters.
Freenet, with a 24.5 percent stake in Sunrise, on Wednesday blocked plans to extend the Swiss company’s right to issue fresh capital to 2021, which could have helped finance its bid to buy UPC in a deal worth $6.3 billion. [nL8N21S3BY]
The move does not scupper the takeover, which was announced in February. A separate shareholder meeting will decide on the $4.1 billion capital increase needed to push that through.
“We are not determining now how we will act,” Vilanek said in an interview on Thursday, adding it will take time for more clarity on how it and other shareholders view the deal.
“The process of forming an opinion will take two or three months,” he said.
Sunrise plans to raise more fresh capital for the deal than the company is now worth, triggering resistance among some Sunrise investors although management has expressed confidence it will win backing for the transaction.
“We would have to inject a billion (Swiss francs) and we don’t have it,” Vilanek said. By not taking part in the rights issue, Freenet’s Sunrise stake could fall to 6-9 percent, it reckons.
The date for the extraordinary general meeting needed to approve the capital hike has not been set while the deal goes through regulatory review.
That gives Freenet time to see how business develops at Sunrise and UPC, whether regulators demand concessions and where Sunrise’s stock price stands.
“I think we will have significantly more data points with half-year results published in early August,” Freenet’s CEO said.
He again criticized the structure of the proposed deal, saying he would prefer a merger in which Liberty Global bore some of the risks.
Reporting by Angelika Gruber, Writing by Michael Shields