Altice Ends Plan to Buy Rest of SFR Amid French Opposition

  • Drahi says ruling on 2.4 billion-euro deal may be appealed
  • SFR investors objected to exchange ratio, fee disclosures

Patrick Drahi’s Altice NV terminated an offer to buy the rest of its SFR Group SA telecom unit -- handing a victory to minority shareholders who challenged the plan -- after France’s financial-markets regulator said it was opposed.

Autorité des Marchés Financiers declared Altice’s bid non-compliant in a filing Tuesday, without immediately giving a full explanation of the decision. That led Altice to drop the offer it made on Sept. 5 to pay 2.4 billion euros ($2.7 billion) for the 22 percent of SFR it didn’t own.

The proposal had angered SFR investors who argued they were being shortchanged.

“We are waiting for the details of the motives associated with the AMF decision,” Stephane Mardel, co-chief executive officer of United First Partners in London, a brokerage and advisory firm that opposed the offer, said in an e-mail.

Absorbing SFR was part of billionaire Drahi’s plan to overhaul Altice after an acquisition binge that turned it into a global, yet heavily indebted, force in telecom and cable television. Altice, based in Amsterdam, postponed the transaction two weeks ago, citing a delayed regulatory review.

“Altice Group regrets this decision, which goes against the interests of both companies, their shareholders and employees,” Altice said in a statement Tuesday. The company said it may appeal.

United First sent a letter to the AMF on Monday complaining that that the exchange ratio in Altice’s proposal was too low, that valuation methods were ignored that would have increased the offer for SFR shareholders, and that more information should be disclosed about certain fees going to Altice.

“If the payment of the fee by SFR creates shareholder value for SFR, and this needs to be clearly illustrated, then SFR shareholders would be supportive,” Mardel said.

Exchange Ratio

The boards of both Altice and SFR had approved the transaction, and an independent expert had concluded the offer was fair to SFR’s minority shareholders, Altice said. The AMF announced its opposition to the bid after the end of trading in Paris.

SFR rose 1.8 percent to 26.52 euros at the Paris close. Altice advanced 2.2 percent to 16.23 euros. Altice had offered eight new Class A shares for every five SFR shares held, valuing the offer at about 25.97 euros per SFR share, based on Tuesday’s closing prices.

Altice had said that integrating SFR, a mobile-phone, cable-TV and broadcasting business that’s struggled in a competitive French marketplace, would centralize strategy and give executives more flexibility. Altice has about 50 billion euros in total debt that will mature in the next 10 years, following acquisitions that include Cablevision and the Suddenlink cable-TV system in the U.S.

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