European telecom major Altice to buy Cablevision Systems for $17.7 bn
18 September 2015
Altice NV, one of the most acquisitive European telecoms groups, pushed further into the US market yesterday with a deal to buy the nation's fourth-largest operator Cablevision Systems Corp for $17.7 billion including debt.
Under the deal, Altice, controlled by telecom baron Patrick Drahi, has offered to pay $34.90 in cash per share, a 22 per cent premium to Cablevision Wednesday's closing price of $28.54.
Drahi entered the US in May with a $9.1 billion acquisition of St Louis-based cable called Suddenlink Communications and declared at the time that Altice would seek more acquisitions and eventually earn half its revenue from the US.
Altice plans to fund the transaction through $14.5 billion of new and existing debt at Cablevision, cash on hand at Cablevision and $3.3 billion of cash from Altice and 30 per cent from private equity fund BC Partners and Canadian investment fund CPP Investment Board.
Altice has received full financing commitments from JP Morgan, BNP Paribas and Barclays.
The proposed acquisition also includes Lightpath, the company's business services unit, News 12 Networks - the largest, and most watched 24-hour local television news network in the US serving more than 3.7 million homes, Newsday Media Group with Newsday, the Pulitzer Prize-winning newspaper distributing to over 1.8 million weeklies on Long Island, and amNewYork, the prominent free daily newspaper in the US with a circulation of approximately 300,000, and Cablevision Media Sales, the company's advertising sales division.
''The acquisition of Cablevision represents Altice's next step in the US market following the announced acquisition of Suddenlink earlier this year. Together both operators represent the 4th largest cable operation in the US market,'' Atlice said in a statement.
Cablevision, owned by Charles Dolan, the patriarch of the Irish-American family, is the leading operator in the New York metropolitan area comprising of New York, New Jersey and Connecticut, which are the most attractive US cable market based on affluence and population density.
Cablevision serves more than 3.1 million residential and business customers with around 65 per cent of its cable customers subscribing to triple-play services.
Drahi, president of Altice, said, ''The strategy of Altice in the large and highly strategic US market is reinforced with the acquisition of Cablevision. We will be in a stronger position, as in all other markets in which we operate, to deliver the best services, invest in the most advanced technology, and develop innovative products for the benefit of our customers.''
Dexter Goei, CEO of Altice said, ''This acquisition, our second in the cable sector in the US, is the next step in Altice's long-term oriented strategy in the US, one of the largest and fastest growing communications markets in the world.''
According to commentators, Altice founder Patrick Drahi who built a telecoms and cable empire via debt-fueled acquisitions in France, Portugal and Israel would, with his cost-cutting cutting strategies achieve the target of $900 million in annual synergies at Cablevision.
Drahi told a Goldman Sachs conference in New York that over 300 Cablevision employees earned pay checks of over $300,000.
"This we will change," said the French-Israeli billionaire, Reuters reported.
Founded by Drahi, the Netherlands-based Altice is a multinational cable and telecommunications company with presence in France, Belgium, Luxembourg, Portugal, Switzerland, Israel, French Caribbean and the Indian Ocean regions and the Dominican Republic.
Drahi has recently been successfully expanding his operations in Europe through aggressive acquisitions and plans to do the same in the US.
Drahi also had an eye on US' second-biggest cable operator Time Warner cable (TWC), after the latter's $45-billion merger with Comcast collapsed because of regulatory concerns. (See: Time Warner Cables in sell off talks with Altice, Charter)
However, in May, US' fourth-biggest cable operator Charter Communications agreed to acquire TWC in a cash-and-stock deal valued at over $78 billion deal including debt. (Charter to acquire Time Warner for $56 bn)
Drahi later said that Altice opted not to bid for TWC because the company was not yet ready to make a large acquisition in a new market.
Approval of the deal would see the American operations of Altice rank among the largest in the US, with about 3.7 million video subscribers, behind Comcast, Time Warner Cable, Charter Communications and Cox Communications.
The Cablevision deal is likely raise concerns with US regulators, especially with the shrinking number of companies in the broadband and cable television markets.