French billionaire Patrick Drahi signaled his intention of taking Altice Europe private, offering €2.5 billion (US$3 billion) to buy out minority shareholders of the indebted telecoms company.
The cash offer of €4.11 ($4.87) per share is being made by Next Private, Drahi's holding vehicle, and represents a premium of 23.8% over the closing price yesterday. The board of Altice Europe said it unanimously supports the transaction and recommends shareholders to accept the offer. Drahi already owns about 77.6% of the Amsterdam-listed company.
Subject to everything going to plan, the transaction is expected to close in the first quarter of 2021, after which Altice Europe will be delisted from the Amsterdam stock exchange as soon as possible. Drahi plans to fund the buyout through a term loan credit agreement with BNP Paribas.
Focus on the long term
According to the statement on Friday, Drahi insisted that the proposed ownership structure "will enable an increased focus on executing our long-term strategy, and underlines my confidence and conviction in Altice Europe's prospects."
He added that Altice Europe "has a unique asset base, fully converged and fiber rich, with a leading position and nationwide fixed and mobile coverage across markets."
Jurgen van Breukelen, chairman of Altice Europe, indicated that Drahi first approached the board over a buyout in August.
"This transaction will allow Altice Europe to more successfully and effectively achieve its goals in a private and fully owned environment, benefiting from the founder's ongoing long-term commitment to the business," he said.
Rise and fall
Altice was listed on the Amsterdam stock exchange in 2014 to help fund the acquisition of SFR in France for €17 billion ($20 billion) later that year and Portugal Telecom (now MEO) for €7.4 billion ($8.8 billion) in 2015. It then entered the US market in 2015, but in 2017 it was forced to make significant changes after spooking investors by issuing an unexpected profit warning that raised fresh questions about the company's ability to manage its heavy debt load.
Meanwhile, Altice has been restructuring its European operations, selling off towers and fiber assets to reduce its consolidated net debt, which stood at close to €29 billion ($34.4 billion) at the end of June.
In its second-quarter results for 2020, Altice Europe again maintained its guidance for the full year. Drahi said the company ended the quarter with a "strong performance and improved trajectory, despite COVID-19 related impacts on areas such as roaming revenue, low margin equipment sales and a significant slowdown in the wider media business."
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— Anne Morris, contributing editor, Light Reading