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MarketScreener Homepage  >  Equities  >  Xetra  >  Freenet Group    FNTN   DE000A0Z2ZZ5

FREENET GROUP

(FNTN)
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Sunrise's UPC deal faces hurdle as top shareholder blocks capital leeway plan

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04/10/2019 | 12:23pm EDT
Logo of broadband and telecommunications provider UPC Schweiz is seen at its headquarters in Wallisellen

ZURICH (Reuters) - Sunrise Communications' top shareholder on Wednesday blocked plans to extend the company's right to issue fresh capital to 2021, complicating its bid to buy Liberty Global's Swiss UPC cable business for $6.3 billion.

The rejection by Freenet at the Swiss telecoms firm's annual shareholder meeting does not scupper the takeover, which was announced in February.

A separate meeting will decide on the $4.1 billion capital increase needed to push that through.

But the thumbs-down from German telecoms company Freenet, which holds a 24.5 percent stake, denied Sunrise the required two-thirds majority to extend capacity for authorized capital until 2021. The measure got only 59.3 percent support.

"Together with Freenet we could have agreed it makes sense by pushing forward a (further potential) capital increase to take pressure off the large capital increase," Sunrise finance chief Andre Krause told Reuters.

"Now we can't do that. Freenet robbed us of optionality."

Freenet had already said it would not take part in the main capital hike, saying it was disturbed by how the transaction was structured. It has not yet decided how to vote at the extraordinary shareholder meeting that will be convened to approve that, Freenet lawyer Alexander Borgwardt told Reuters on the sidelines of the annual meeting.

The date for that meeting - where only a simple majority is needed - has yet to be set pending regulatory approval for the deal.

Authorizing fresh capital now could have helped contribute some of the money needed for the deal, Borgwardt said, adding: "We think this should be voted on at the end, when the entire transaction will be discussed."

Sunrise Chairman Peter Kurer said a two-thirds majority for the capital increase could be needed should Liberty Global in the meantime buy shares in Sunrise.

In that case, it would be easier for Freenet with its nearly one-quarter stake to block the capital increase because not all shareholders attend meetings. The turnout on Wednesday, for instance, was 62 percent of the voting capital.

There was no evidence at this stage that Liberty planned such a move, Krause said.

Kurer had earlier expressed optimism that Sunrise would win backing to raise the money needed to complete the UPC takeover.

Sunrise officials have met more than 170 large shareholders and potential investors in recent weeks to outline the deal. "After these talks they view the transaction significantly more positively," he said.

Kurer said he anticipated regulatory approval, adding a rival could well buy UPC should Sunrise fail.

(Writing by Michael Shields)

By Angelika Gruber

Stocks mentioned in the article
ChangeLast1st jan.
FREENET GROUP -0.93% 17.565 Delayed Quote.4.66%
LIBERTY GLOBAL PLC -0.38% 26.01 Delayed Quote.21.88%
SUNRISE COMMUNICATIONS GROUP 0.35% 72.55 Delayed Quote.-16.37%
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Financials (EUR)
Sales 2019 2 890 M
EBIT 2019 291 M
Net income 2019 223 M
Debt 2019 1 812 M
Yield 2019 9,31%
P/E ratio 2019 10,0x
P/E ratio 2020 9,72x
EV / Sales2019 1,41x
EV / Sales2020 1,36x
Capitalization 2 270 M
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Mean consensus HOLD
Number of Analysts 15
Average target price 21,35  €
Last Close Price 17,73  €
Spread / Highest target 63,6%
Spread / Average Target 20,4%
Spread / Lowest Target -15,4%
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NameTitle
Christoph Vilanek Chief Executive Officer
Helmut Thoma Chairman-Supervisory Board
Ingo Arnold Chief Financial Officer
Stephan A. Esch Chief Technology Officer
Claudia Anderleit Member-Supervisory Board
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