After an intense, weeks-long bidding war for SFR, Vivendi has decided to sell the mobile operator to Altice in a deal worth up to €17bn.
Counter-bidder Bouygues failed to hold up a decision by SFR’s supervisory board in favour of rival Altice, owner…
After an intense, weeks-long bidding war for SFR, Vivendi has decided to sell the mobile operator to Altice in a deal worth up to €17bn.
Counter-bidder Bouygues failed to hold up a decision by SFR’s supervisory board in favour of rival Altice, owner of French cableco Numericable, despite a last minute improvement of its offer on Friday last week.
In a statement published on Saturday, Vivendi detailed a number of reasons for choosing Altice, including that “all the experts consulted concluded that the Altice/Numericable offer presents the lowest competition risks. SFR and Numericable are not present on the same market segments and their activities are complementary.”
Competition experts had agreed that a merger of SFR with its direct rival Bouygues would have been subject to extensive scrutiny from antitrust authorities. This could have significantly delayed closing and experts also anticipated that regulators would have insisted on harsh remedies to address the impact on competition in the mobile market.
Under the deal struck with Altice, Vivendi will receive €13.5bn at closing. The companies also agreed a €750m earn-out, depending on the performance of SFR/Numericable going forward. This will be payable if SFR/Numericable’s EBITDA-capex reaches at least €2bn during one fiscal year.
Vivendi will initially keep a 20% stake in the combined entity, which will be publicly listed after the integration of SFR into Numericable. After a one year lock-up Vivendi could sell the stake, with call options for Altice in place.
The seller considers the overall value of the offer to be in excess of €17bn. The transaction values SFR at 6.5x 2014E EBITDA pre-synergies and 5.0x 2014E post synergies, according to Altice.
Vivendi noted: “This balance between cash upfront and future upside from industrial value creation fits with Vivendi’s philosophy, an industrial and financial group concerned about creating long term value in the interest of shareholders, employees and consumers.”
Financing
Separately, Altice also agreed to acquire Carlyle’s 21.32% Numericable stake as well as Cinven’s 13.27% stake for a total consideration of €1.3bn. €500m of this will be paid in cash, the remaining €800m in Altice shares. Numericable traded around the €30.15 mark this morning, giving it a market cap of €3.28bn.
Following the merger of Numericable and SFR, Altice will therefore own 60% of the combined entity, while a further 20% will be in free float.
The merged entity will have debt of €11.64bn with a weighted average life of at least 7 years fully underwritten by a syndicate of banks, according to Altice. To help finance the deal Numericable will issue €4.7bn worth of new shares. Altice will subscribe pro rata to the rights issue. The remaining portion will be financed by €8.8bn in new debt,
Altice also mulls raising up to an additional €550m equity to finance the overall transaction.
Altice CEO Dexter Goei said in a conference call that closure is expected in Q4 the latest.
