Drahi's Altice takeover plan hits a road bumpDrahi's Altice takeover plan hits a road bump

French billionaire Patrick Drahi faces opposition to his plan to buy out minority shareholders in Altice Europe, after hedge fund Lucerne Capital Management said his offer is opportunistic and significantly undervalues the telecoms company.

Earlier in September, Patrick Drahi signaled his intention of taking Altice Europe private, offering €2.5 billion (US$2.9 billion) to buy out minority shareholders of the indebted telecoms company.

Figure 1: Rebel rebel: A rogue shareholder has accused Patrick Drahi of using the coronavirus pandemic to buy out minority shareholders at a discount.
(Source: Ecole polytechnique on Flickr CC 2.0)

The cash offer of €4.11 ($4.82) per share is being made by Next Private, Drahi's holding vehicle.

Lucerne Capital, which manages funds that own about €94 million ($110 million) of shares in Altice Europe, said it has "deep concern" about the all-cash offer.

As well as undervaluing the company, the hedge fund said the offer "is structured in a way that neglects the rights of Altice Europe minority shareholders."

In a letter sent to the Altice Europe board, Lucerne Capital said the offer price in no way reflects the true value of the company, "and in fact includes a significant discount rather than a premium" and is designed to squeeze out minority investors.

On the upside

The shareholder accused Drahi of using "the temporary lull in the share price, caused by COVID-19, to unlock the huge upside in value for himself and others with equity exposure only, to the detriment of the minority shareholders."