Altice has revealed plans to change its structure to transform its shares into a more powerful equity acquisition currency. Under the proposal, the acquisitive telecoms investor will merge into a new Amsterdam-based entity, Altice NV. Its shareholders…
Altice has revealed plans to change its structure to transform its shares into a more powerful equity acquisition currency.
Under the proposal, the acquisitive telecoms investor will merge into a new Amsterdam-based entity, Altice NV. Its shareholders will receive three new common A shares and one common B share in the Dutch vehicle for each of their existing Altice shares.
The dual-class share structure means that Altice’s founder, Patrick Drahi, will maintain majority control of the company.
Altice’s recent acquisitions have been characterised by their high level of non-investment grade debt. By creating more shares, it will be easier for Altice to use its stock to fund future M&A.
Speaking on an analyst call, CEO Dexter Goei said Altice would now be able to carry out €50bn-plus deals should it wish.
CFO Dennis Okhuijsen added that the debt markets were still favourable, and that there was support to further extend the balance sheet for the right transaction.
An EGM will be scheduled for the first week of July, when Altice shareholders will vote on the new structure. So far, 64.6% of shareholders have voted in favour of the plan, which requires approval by two thirds.
“Pursuant to the merger, the group will benefit from a powerful equity acquisition currency without prejudicing voting control of the company’s founding shareholder group,” Goei said in a statement.
“This will further strengthen Altice’s position in the next phase of value-enhancing growth.”
Altice said the transaction gave it an enterprise value of €61.9bn and an equity value of €32.5bn, with the latter having risen 557% since the company’s listing in January 2014. Asked on the conference call why Altice didn’t implement this new share structure when it listed, Goei said the management simply didn’t anticipate such rapid, acquisition-fuelled growth.
JP Morgan and Morgan Stanley are acting as financial advisers to Altice. Luther Law Firm and Loyens & Loeff are its legal advisors, and Atoz is providing counsel on tax issues.
This week Bouygues Telecom turned down a US$11bn offer by Altice, which yesterday issued a statement emphasising the quality of its bid – adding that it was still on the table. It said the offer was fully and unconditionally financed under commitment letters from BNP Paribas, JP Morgan and Morgan Stanley, and would maintain job levels.
Altice added that the offer was not 100% financed with debt, as some press had reported. Instead, its bid comprises 60%-65% equity and 35%-40% debt. Altice will raise part of the equity by selling assets to challenger Iliad, a transaction also designed to smooth the regulatory process.
The French government has so far been hostile to a sale of Bouygues to Altice, which would see the target merged with Numericable-SFR in a four-to-three consolidation move.
