France Telecom (FTE) and TDC announced that they have reached an agreement to combine their respective Swiss subsidiaries, Orange Communication S.A. Or "Orange Switzerland" and Sunrise Communications S.A. France Telecom will pay at closing a net amount of €1.5 billion to TDC and, as a result of a series of steps, become a 75% shareholder in the combined entity, and TDC will hold the remaining 25%. The combination and integration of Sunrise and Orange Switzerland is expected to generate synergies with an estimated net present value of €2.1 billion.
The Board of the combined entity will be composed of representatives of TDC and France Telecom, with France Telecom holding the majority of the seats. Thomas Sieber, CEO of Orange Switzerland, will be the Chief Executive Officer of the combined entity.
In addition, TDC will have the right to sell its stake to third-parties from the second anniversary of closing or to do an initial public offering of the company from the third anniversary of closing. In addition, France Telecom will have an option to buy TDC's shares from the first anniversary of closing at a minimum value of €1.2 billion, compounded at a rate of 7% per annum.
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