Billionaire Drahi to Take Over Altice in $5.8 Billion Deal
By Jennifer Ryan
11 September 2020, 09:06 CEST Updated on 11 September 2020, 09:32 CEST
Billionaire Patrick Drahi is attempting to end five years of share volatility at Altice Europe NV by announcing a plan to take it private at a value of about 4.9 billion euros ($5.8 billion), far below its recent peak.
Drahi, the founder and largest shareholder of the French telecommunications company, will pay 4.11 euros a share through a vehicle Next Private, the companies said in a statement Friday. The offer represents a 24% premium over Thursday’s closing price. Drahi already owns 32% of the company, according to data compiled by Bloomberg.
Altice’s debt levels have contributed substantial volatility in the shares in recent years, an issue cited in the statement as supporting the move to delist the company. Though performance at its French SFR unit has improved, it nevertheless faces pressure to both invest heavily in fiber broadband while reducing borrowings.
Shares in Altice rose as much as 24.6% in early trading Friday. The stock is down about 42.2% since the start of the year, more than the 17% drop in the Stoxx Telecommunications index.
The move could allow Drahi to focus more on his fast-growing U.S. business. Drahi bought Suddenlink in 2015 and Cablevision in 2016 with a plan to create another U.S. cable giant. He’s now back on the U.S. M&A trail. Altice USA last week offered $7.8 billion to buy Canadian cable company Cogeco Inc.’s U.S. assets and sell the rest to Rogers Communications Inc.
However, Drahi will be taking on a significant debt load. Net debt dropped to 29 billion euros in the second quarter from 31.2 billion euros at the end of March, and the company has stuck to a goal of delivering to a target of 4 times to 4.5 times net debt to Ebitda. It is also unclear whether shareholders will agree to a premium below recent levels. Altice was trading at over 6.5 euros a share in early February.
The delisting highlights the pressure Europe’s phone companies face in rolling out the latest communications technology while facing a squeeze on revenue from regulation and the pandemic. The slump in share prices at Orange SA and Telefonica SA both resulted in their recent expulsion from benchmark indexes.
It’s the second time this month a major European TMT company has discussed delisting from public markets. Germany’s startup factory Rocket Internet SE said on September 1 it would withdraw its shares from the Frankfurt and Luxembourg stock exchanges.
European telecom deals have surged in the third quarter after a slow start to the year, with more than $17 billion announced before today, according to data compiled by Bloomberg.