Altice will acquire 70 per cent of the share capital in Suddenlink, the seventh largest US cable operator with 1.5 million residential and 90,000 business customers, as part of its plans to consolidate the US cable market.
The Luxembourg-based telecoms and cable company owned by French billionaire Patrick Drahi, hopes to add customers from Texas, West Virginia, Louisiana, Arkansas and Arizona, growing its markets for both residential and business services. In 2014, Suddenlink generated $2.3 billion in revenue and over $900 million in EBITDA with a balanced revenue mix between residential video, broadband, telephony and business services.
Shares of Altice rose 7.3 percent to €124 at 9:08 am in Amsterdam on 20 May, the day of the acquisition annoucnement. This was followed by Drahi’s reported takeover approach of Time Warner Cable, just a week after Time Warner Cable’s merger with Comcast was called off.
The acquisition marks Altice’s first push into the cable sector in the US, opening “an attractive industrial and strategic avenue for Altice” in the territory, according to Dexter Goei, CEO of Altice. The transaction is to be financed with $6.7 billion of new and existing debt at Suddenlink, a $500 million vendor loan note from BC Partners and CPP Investment Board, $1.2 billion of cash from Altice with the remainder representing the roll over by BC Partners and CPP Investment Board, which will retain a 30 per cent stake in Suddenlink.
Through Altice, Drahi owns 75 per cent of Numericable, France’s largest cable operator and in 2014, Drahi won a takeover battle for Vivendi SA’s French phone unit SFR in a $23 billion deal. In June, Altice Group acquired Virgin Mobile France followed by a December purchase of Portugal Telecom.
“We are looking forward to our partnership with BC Partners and CPP Investment Board and believe Suddenlink is a best-in-class business that should be able to deliver profitability and cash flow levels in line with best-in-class European cable businesses,” added Goei.
The Suddenlink transaction is expected to close in the fourth quarter of 2015 once applicable regulatory approvals have been obtained.