Altice's Fund Partners to Buy $1 Billion Cablevision Stake

  • Agreement means Altice's Cablevision takeover is fully funded
  • Billionaire Drahi moves closer to completing biggest U.S. deal

Canada Pension Plan Investment Board and private-equity firm BC Partners agreed to buy a $1 billion stake in Cablevision Systems Corp., helping French billionaire Patrick Drahi finance the takeover of the U.S. company to build a cross-Atlantic cable giant.

The agreement over a 30 percent stake in Cablevision means the company’s acquisition by Drahi’s Altice NV is fully funded, the Amsterdam-based company said Tuesday. Altice has already sold 1.6 billion euros ($1.8 billion) of new shares and $8.6 billion in new Cablevision debt to help finance the $17.7 billion purchase.

Europe’s most acquisitive cable group is moving closer to completing its largest U.S. deal to date. Bethpage, New York-based Cablevision would vault Altice into the ranks of major pay-TV providers in the U.S.

The transaction stems from an arrangement reached when the funds agreed to sell a 70 percent stake in St. Louis-based Suddenlink Communications, the seventh-largest cable operator in the U.S., to Altice in May in a $9.1 billion deal. That purchase marked the first U.S. foray by 52-year-old Drahi.

“We negotiated as part of Suddenlink an option to invest pro-rata alongside them on any future deals they have in North America,” Shane Feeney, head of direct private equity at Canada Pension, said in an interview.

Altice first approached Canada Pension and BC Partners about Suddenlink because it wanted a U.S. platform to expand in North America, Feeney said. At that time, Canada Pension and its partner had not held Suddenlink for as long as they would have liked, and the option to co-invest in future Altice transactions in the region provided an avenue to continue to invest in the sector, he said.

“It’s very cash-generative sector with not a lot of volatility, which we like. It’s also a consolidating sector,” Feeney said. “It’s just a good, old-fashioned private-equity sector with some very strong cash-flow generation characteristics.”

Altice shares added 1.7 percent to 18.31 euros at 4:19 p.m. in Amsterdam, valuing the company at about 20 billion euros. In less than three months since the creation of a holding structure that would allow Drahi to retain control of his cable empire as he uses new stock to finance acquisitions, Altice’s Class A and Class B stocks have each fallen more than 30 percent.

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