Liberty Global secures Sunrise deal

BY Richard Summerfield

Liberty Global has agreed to acquire Sunrise Communications in an all-cash, $7.4bn deal.

Under the terms of the deal, Liberty Global will pay 110 francs per share for Sunrise, a 32 percent premium to the company’s average share price over the past 60 days. The transaction is expected to close around year end, subject to regulatory approval.

Last year, a $6.3bn deal which would have seen Liberty sell its Swiss cable unit UPC to Sunrise collapsed following opposition from shareholders including Freenet, a German company that owns 24 percent of Sunrise. On Wednesday, Freenet pledged its support to the new bid, which “appreciates the value that Sunrise has created over the past five years”.

“The industrial logic of this merger is undeniable, but the real winners are Swiss consumers and businesses,” said Mike Fries, chief executive of Liberty Global. “This powerful combination of 5G wireless and gigabit broadband will accelerate digital investment at a time when connectivity has never been more essential. 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. We look forward to welcoming Sunrise employees to the Liberty and UPC family and congratulate them and the board on their success.

“This transaction is another significant step on our path to create fixed-mobile champions in all of our core markets, crystallising the value of our superior broadband networks and driving long-term, sustainable free cash flow growth. Even after this deal, and assuming completion of our recently announced UK transaction, we will continue to have approximately $7 billion of liquidity to drive value-creation for shareholders,” he added.

“Sunrise has delivered on its quality-focussed strategy and built one of the best mobile networks worldwide,” said Andre Krause, chief executive of Sunrise. “We have successfully gained market share in all our businesses, underpinned by our strong focus on customer centricity, service excellence, innovation and quality offering. We are very proud of what our employees have achieved and believe that the combination with UPC Switzerland will enable the combined company to become the leading fully converged challenger in the market.”

The combined business will have 3.17bn Swiss francs in revenue, with a customer base comprising 2.1 million mobile subscribers, 1.2 million broadband subscribers and 1.3 million TV subscribers — around a 30 percent market share in each segment, according to Liberty Global.

News: Liberty Global surprises with $7.4 billion deal to buy Sunrise in latest telecoms consolidation

One in three UK firms expect to cut jobs, says new research

BY Fraser Tennant

One in three companies in the UK expect to make redundancies in the third quarter of 2020, according to a new report by the Chartered Institute of Personnel and Development (CIPD) and the Adecco Group.

The report, based on a survey of more than 2000 employers, found that employment confidence has fallen in all three sectors of the economy: private, public and voluntary. In the private sector, 38 percent of firms plan to make redundancies, compared to 16 percent in the public sector.

Overall, the figures represent a 50 percent jump in the number of employers expecting to cut jobs compared to three months ago.

“Until now, redundancies have been low – no doubt due to the Job Retention Scheme – but we expect to see more redundancies come through this autumn, especially in the private sector once the scheme closes,” said Gerwyn Davies, senior labour market adviser at the CIPD. “Hiring confidence is rising tentatively, but this probably will not be enough to offset the rise in redundancies and the number of new graduates and school leavers entering the labour market over the next few months.”

That said, amid the gloomy forecast, there is some positivity. “Nearly half (49 percent) of UK employers are planning to recruit over the next three months,” said Alex Fleming, country head and president of staffing and solutions at the Adecco Group UK and Ireland. “We are also seeing more candidates applying for high skilled roles, which aligns with the trend of people sourcing alternate forms of education in order to upskill and expand their knowledge.”

Other key findings of the report include: (i) a large variation across sectors in terms of the net employment balance, with employment confidence highest in healthcare and public administration, and lowest in hospitality, transport and storage, and retail; (ii) in terms of the nations and regions, confidence is highest in Wales and North East England, and lowest in the West Midlands and Scotland.

In addition, more than four in 10 employers have implemented recruitment freezes. The proportion of organisations adopting a recruitment freeze is significantly higher for the private sector than the public sector, especially in hospitality, business services and IT.

“Businesses must demonstrate resilience and adopt new approaches to closing the skills gap by investing in upskilling and reskilling workforces,” concluded Mr Fleming. “Creating a positive workplace culture is also integral to maintaining focus, engagement and motivation among existing employees.”

Report: Labour Market Outlook: Summer 2020

Virgin Atlantic receives go-ahead for restructuring plan from US court

BY Fraser Tennant

Following its Chapter 15 filing last week to protect itself from creditors in the US while undertaking a solvent recapitalisation in the UK, Virgin Atlantic has received support for its restructuring plan from a US court.

The restructuring is based on a five-year business plan and, with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, paves the way for the airline to rebuild its balance sheet and return to profitability from 2022.

At the same time, the recapitalisation will deliver a refinancing package worth £1.2bn over the next 18 months, in addition to the self-help measures already taken, including cost savings of approximately £280m per year and £880m rephasing and financing of aircraft deliveries over the next five years. 

The airline is one of many in the aviation industry to have been severely impacted by the coronavirus (COVID-19) pandemic, having closed its Gatwick base with the loss of 3500 jobs.  

“Virgin Atlantic has reached another important milestone towards securing its future, undertaking a hearing in the US courts to support its plan for a private-only solvent recapitalisation of the airline, following the severe impact of the COVID-19 pandemic on the global economy, the nation and the travel and aviation industry,” said a Virgin Atlantic spokesperson. “The US proceedings were commenced under provisions that allow US courts to recognise foreign restructuring processes. In the case of Virgin Atlantic, the process we have asked to be recognised is a solvent restructuring of an English company under Part 26A of the UK Companies Act 2006.”

“The US court has supported the company’s restructuring plan,” continued Virgin Atlantic. “The US proceeding is a standard procedural step to protect the airline’s assets while Virgin Atlantic’s recapitalisation is completed in the UK. The US court has scheduled a hearing for 3 September 2020 to immediately follow the final hearing before the English court.

“With support already secured from the majority of our creditors and stakeholders, it is expected that the restructuring plan and solvent recapitalisation will come into effect in September. We remain confident in the plan.”

News: US Courts Support Virgin Atlantic’s UK Recapitalization Plan

Virgin Atlantic files for Chapter 15 bankruptcy protection

BY Fraser Tennant

At a time when coronavirus (COVID-19) is having a severe impact on the aviation industry, Virgin Atlantic Airways is seeking protection from creditors in the US under Chapter 15 of the US Bankruptcy Code – a mechanism that allows US courts to recognise foreign restructuring processes.

In the court filing, the beleaguered British airline stated that it had negotiated an agreement with stakeholders that would allow for “a consensual recapitalisation” that would remove debt from its balance sheet and “immediately position it for sustainable long-term growth”.

The Chapter 15 filing is alongside proceedings in a UK court, which saw the airline obtain approval earlier this week for affected creditors to vote on the restructuring plan. The vote is scheduled to take place on 25 August.

“In order to progress the private-only solvent recapitalisation of the airline, the restructuring plan is going through a court-sanctioned process under Part 26A of the Companies Act 2006, to secure approval from all relevant creditors before implementation,” said a Virgin Atlantic spokesperson. “With support already secured from the majority of stakeholders, it is expected that the plan, and recapitalisation, will come into effect in September. We remain confident in the plan.”

The restructuring plan – agreed with stakeholders on 14 July – will deliver a refinancing package worth around £1.2bn over the next 18 months, including cost savings of approximately £280m per year and an estimated £880m rephasing and financing of aircraft deliveries over the next five years.

Once approved and implemented, Virgin Atlantic expects the restructuring plan to help it to return to profitability from 2022.

One of many players operating in an industry to be majorly impacted by COVID-19, Virgin Atlantic – 51 percent owned by Richard Branson’s Virgin Group and 49 percent by US airline Delta – closed its Gatwick base in May and cut more than 3500 jobs in an attempt to absorb the devastating fallout from the pandemic, which has grounded planes and decimated demand for air travel.

“Once our plan is approved, we will continue to focus on providing our customers with the service they have come to expect,” said Shai Weiss, chief executive at Virgin Atlantic, when the restructuring plan was announced last month. “While we must not underestimate the challenges ahead and the need to continuously respond to this crisis, the pursuit of our vision continues.”

News: Virgin Atlantic Airways seeks U.S. Chapter 15 bankruptcy protection

Varian and Siemens Healthineers combine in $16.4bn deal

BY Fraser Tennant

In a deal which creates a global healthcare leader with a comprehensive cancer care portfolio, medical device and software manufacturer Varian Medical Systems is to combine with healthcare technology supplier Siemens Healthineers AG in an all-cash transaction valued at $16.4bn.

Under the terms of the agreement, German health group Siemens Healthineers will acquire all outstanding shares of US firm Varian for $177.50 per share in cash.

The combined company will offer an integrated platform of end-to-end oncology solutions to address the entire continuum of cancer care, from screening and diagnosis to care delivery and post-treatment survivorship.

Through the transaction, Siemens intends to address a long-term rise in the incidence of cancer – from 14 million cases in 2010 to a forecast of 25 million in 2030.

"This transaction represents an important milestone in our company's history, and our board is confident that this is the right path forward for Varian," said Dow Wilson, president and chief executive of Varian. "In addition to delivering immediate and compelling value to our shareholders, the combination with Siemens Healthineers brings us even closer to realising our transformative vision of a world without fear of cancer.

The transaction has been unanimously approved by Varian's board of directors.

“With this combination of two leading companies we make two leaps in one step: a leap in the fight against cancer and a leap in our overall impact on healthcare,” said Dr Bernd Montag, chief executive of Siemens Healthineers. “This decisive moment in the history of our companies means more hope and less uncertainty for patients, an even stronger partner for our customers, and for society more effective and efficient medical care.”

The transaction is expected to close in the first half of 2021, subject to approval by Varian shareholders, receipt of regulatory approvals and other customary closing conditions. It is expected that Varian will continue to operate under the Varian name as an independent company within Siemens Healthineers.

Dr Montag concluded: “Together with Varian's outstanding and passionate employees, we will shape the future of healthcare more than ever before."

News: Siemens Healthineers to acquire Varian for $16.4 billion