Report: Sunrise owners in merger talks with Orange Switzerland bidders

CVC Capital Partners, owners of Switzerland's No.2 operator Sunrise, has held initial talks with rival buyout firm Providence Equity Partners about a merger should the latter be successful in making the winning bid for France Telecom's Swiss mobile subsidiary, according to multiple reports.

CVC which is believed to be in talks with other potential bidders, has given permission to the bankers that helped it finance the Sunrise acquisition to talk to Providence Equity about its bid for Orange Switzerland, according to the Financial Times, which cited unnamed sources. Reuters reported, also citing an unnamed source, that there is no agreement between the two private equity firms and any deal is highly conditional.

However, France Telecom is said to be concerned over CVC's possible involvement, believing that the UK-based private equity firm might be looking to disrupt the bidding process. "If anyone is trying to condition their offer on a follow-on merger, they will fail," one person close to the process told the Financial Times.

France Telecom has previously announced that it has arranged for Credit Suisse, JPMorgan and HSBC to provide financial support for all potential bidders.

A proposed merger of the two operators was vetoed in 2009 by the Swiss telecoms regulator prior to CVC's involvement with Sunrise. However, the authorities might adopt a different stance if a new entrant appears during the Swiss spectrum auctions that are planned for next year.

France Telecom CFO Gervais Pellissier  recently said that 11 companies had expressed an interest in bidding for its Swiss subsidiary. Final offers are due by Dec. 12, with a decision planned for early January.

For more:
- see this Financial Times article (sub. req.)
- see this Reuters article
- see this Dow Jones Newswires article
- see this Telegeography article

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