Freenet Considers Share Buyback After Sunrise Stake Sale
(Bloomberg) -- Freenet AG is considering using part of the proceeds from the sale of its 24.4% stake in Sunrise Communications Group AG to help fund a share buyback, according to people familiar with the matter.
The German telecommunications group could spend as much as 150 million euros ($177 million) to buy back its own shares, one of the people said. No final decisions have been taken and its plans could still change, according to the people, who asked not to be identified as discussions are private.
Freenet has agreed to offload its holding in Sunrise to billionaire John Malone’s Liberty Global Plc, which is taking over the Swiss phone carrier at 110 Swiss francs per share. The offer values Freenet’s Sunrise stake at around 1.2 billion Swiss francs ($1.3 billion). Using part of the funds to buy back its own stock would make up for a suspended shareholder payout earlier this year.
“A share buyback is the best option to return value to shareholders,” Freenet Chief Executive Officer Christoph Vilanek told Bloomberg News.
Frankfurt-listed Freenet could also use a chunk of proceeds from the sale to repay the debt it assumed to finance the acquisition of the Sunrise stake for around 714 million euros in 2016. Freenet may be able to cut its net debt to 1.7 times Ebitda from 4.4, Bloomberg Intelligence analyst Erhan Gurses wrote in a note Wednesday.
The sale of Sunrise reverses a failed transaction from 2019, in which Liberty’s attempt to sell the company’s UPC Switzerland unit to Sunrise crumbled in the face of opposition from Freenet and influential proxy adviser Institutional Shareholder Services.
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