By John Revill
ZURICH (Reuters) - Liberty Global (O:LBTYA) is taking over Sunrise Communications (S:SRCG) in a deal valuing the Swiss telecoms group at 6.8 billion Swiss francs ($7.40 billion), it said on Wednesday.
Sunrise's board recommended the all-cash offer of 110 Swiss francs per share put forward by Liberty Global, set up by U.S. cable pioneer John Malone.
Germany's Freenet (DE:FNTGn), Sunrise’s largest shareholder, which holds approximately 24% of Sunrise’s capital, has signed a binding, unconditional commitment to tender its shares at the offer price, Liberty Global said.
The deal marks a turnaround from a 6.3 billion franc takeover attempt by Sunrise for Liberty Global's Swiss cable business UPC, which failed last year.
Shareholders, including Freenet, scuppered that deal, saying the takeover was too expensive, improperly financed and strategically flawed.
Sunrise made clear the deal was effectively dead, with the debacle triggering the departure of chief executive Olaf Swantee and chairman Peter Kurer.
On Wednesday, Liberty Global said the combination would create a significant challenger in the Swiss market, which is dominated by government-controlled Swisscom (S:SCMN).
Together, the combined business would have 3.17 billion Swiss francs in revenue, 2.1 million mobile post-paid subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers, reflecting approximately 30% market share in each segment, Liberty Global said.
Mike Fries, chief executive of Liberty Global, said, "The industrial logic of this merger is undeniable."
"Fixed-mobile convergence is the future of the telecom sector in Europe, and now Switzerland will have a true national challenger to drive competition and innovation for years to come," Fries added.