Drahi buckles under pressure, raises offer for Altice EuropeDrahi buckles under pressure, raises offer for Altice Europe
Minority shareholders to withdraw legal action after Drahi's Next Private vehicle increases offer price to €5.35 per share.
December 16, 2020
The ongoing saga of the attempt by French billionaire Patrick Drahi to take Altice Europe private took a further twist on Wednesday, when the offer price was raised from the original €4.11 to €5.35 (US$6.5) per share.
It seems that Drahi has caved in to pressure from minority shareholders, some of which had taken the matter to an Amsterdam court after complaining that the offer price was too low.
Bloomberg noted that Drahi's new offer values Altice Europe at around €5.7 billion ($6.9 billion), up from €4.9 billion previously.
Hedge fund Lucerne Capital Management, which manages funds that own about €106 million ($129 million) of shares in Altice Europe, has been particularly vocal in its opposition to the offer.
Lucerne sent letters to the board of Altice Europe on October 1 and November 30 saying that, among other things, the original offer of €4.11 significantly undervalued the company. Sessa Capital and Winterbrook Global Opportunities Fund also requested an investigation.
Subsequently, Lucerne filed a petition with the Enterprise Chamber in Amsterdam on December 7, asking the court to order an inquiry into Altice Europe, to appoint three independent non-executive directors to assess and supervise the original offer, and to prohibit a vote on what it called the "pre-wired restructuring measures."
The increase in the offer price indicates that Drahi has clearly taken note of shareholder dissatisfaction with the offer. As a consequence, petitions submitted to the court by Lucerne and other funds will be withdrawn on Wednesday. Funds representing about 9.1% of the outstanding listed shares have also now agreed to take up the offer.
Lucerne expressed satisfaction with the new offer price, saying it provides fair value to minority shareholders "and represents a positive outcome for all stakeholders in the company."
A delisted future
Drahi officially launched his plan to take Altice Europe private on November 24 after first announcing the plan in September. He is offering to buy out minority shareholders of the indebted telecoms company via his holding vehicle, Next Private. Drahi currently indirectly owns about 77.58% of Altice Europe's issued share capital.
Next Private and Altice Europe said that "having Altice Europe operate without minority shareholders and without a listing on Euronext Amsterdam (or any other stock exchange) is better for the sustainable success of its business and long-term value creation."
It recently reported a reasonably solid performance in the third quarter, with revenue and EBITDA growth at group level and in its two main markets.
Bloomberg also pointed out that while performance has improved at SFR, Altice is under pressure to invest in fiber broadband and 5G wireless networks and still reduce leverage.
— Anne Morris, contributing editor, special to Light Reading
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