John Malone’s $6.4 billion Swiss sale is too close to call

Bloomberg

Liberty Global Plc Chairman John Malone’s latest move to reshape his European interests is hanging in the balance.
The sale of his Swiss business to Sunrise Communications Group AG for 6.3 billion Swiss francs ($6.4 billion) is proving a tough sell for the buyer’s shareholders and the biggest of those, Freenet AG, on Monday rejected management’s latest move to win them over.
Failure would leave the dealmaking billionaire Malone saddled with an underperforming continental business when he’s trying to focus on the UK, where local unit Virgin Media is in a costly battle for broadband users with rival BT Group Plc. Malone already sold a chunk of Liberty Global’s continental European businesses to Vodafone Group Plc and may be waiting for proceeds from the Swiss deal before deciding on his next big move.
“If it fails, then he’s got a bit of a problem. They have to turn Switzerland around,” said Steve Malcolm, an analyst at Redburn.
Sunrise said it was shifting more of the burden for financing the purchase of Liberty Global’s UPC Switzerland unit from shareholders to bondholders.
It now aims to raise 2.8 billion francs in a rights issue, 1.3 billion less than previously planned. Sunrise debt is rated below investment grade by Moody’s Investors Service.
German mobile provider Freenet, which owns around a quarter of the Swiss company’s stock, quickly rejected the move. Freenet has said the price Sunrise management agreed to pay is too high given pressures in the cable industry and UPC Switzerland’s operating performance.
“If this is the only change, it will not impact our decision on voting against the deal,” Freenet said in an emailed statement anticipating the changed financing terms.