DENVER, Colorado - Liberty Global (NASDAQ:LBTYA) Ltd. (NASDAQ:LBTYA, LBTYB, LBTYK), a leading provider of broadband, video, and mobile communications services, today announced plans to spin off its Swiss operation, Sunrise, into a separate publicly traded company. The move is designed to maximize shareholder value by allowing investors to directly participate in Sunrise's growth prospects.
The spin-off leverages Sunrise's position as a full-service media and communications (FMC (NYSE:FMC)) challenger in the Swiss market, which has been bolstered by the successful integration with UPC since their combination in 2020. The operational business will remain unaffected, ensuring continuity for customers, employees, suppliers, and other stakeholders.
Liberty Global's CEO, Mike Fries, stated that the spin-off aligns with the company's strategy to unlock value for shareholders, who will benefit from Sunrise's strong capital structure and future cash generation potential. According to Sunrise CEO André Krause, the company is well-positioned to provide attractive shareholder returns due to its robust free cash flow (FCF) profile and plans for an appealing remuneration framework.
Sunrise is expected to be listed on the SIX Swiss Exchange in the second half of 2024, with two classes of shares. The listing will be supported by up to CHF1.5 billion ($1.7 billion) in debt reduction, funded through Sunrise's FCF, debt optimization, and Liberty Global's liquidity, including proceeds from non-core asset disposals.
The company has appointed J.P. Morgan and UBS as financial advisors for the transaction, which is expected to be tax-free for US shareholders of Liberty Global. The spin-off is subject to market conditions, board and shareholder approvals, and other customary closing conditions.
Following the spin-off, Liberty Global will retain its interests in Telenet, Virgin Media Ireland, and stakes in Virgin Media-O2 and VodafoneZiggo, along with its Ventures portfolio and remaining cash balance.
The proposed spin-off is anticipated to provide distinct and compelling investment profiles for both entities, appealing to a broader investor base. Sunrise will present further details at a Capital Markets Day later this year.
This article is based on a press release statement.
InvestingPro Insights
As Liberty Global Ltd. (NASDAQ:LBTYA) announces the strategic spin-off of its Swiss operation, Sunrise, investors are closely monitoring the company's financial metrics and market performance to gauge the potential impact of this corporate maneuver. According to InvestingPro data, Liberty Global currently holds a market capitalization of approximately $7.86 billion USD, indicating a substantial presence in the communications sector.
InvestingPro Tips reveal that Liberty Global boasts impressive gross profit margins, with the last twelve months as of Q4 2023 showing a margin of 68.17%. This suggests a strong ability to control costs relative to revenue and could be a positive sign for Sunrise's financial health post-spin-off. Furthermore, the company has experienced a strong return over the last three months, with a 19.98% price total return, which may instill confidence in investors looking forward to the spin-off's completion.
However, it's worth noting that analysts do not expect Liberty Global to be profitable this year, and the company has not been profitable over the last twelve months. This information could be vital for investors considering the long-term value proposition of both Liberty Global and the upcoming Sunrise entity. Additionally, the company does not pay a dividend to shareholders, which may influence investment decisions for those seeking regular income streams.
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