Altice Ends Plan to Buy Rest of SFR Unit After French Ruling

  • Drahi says decision 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.

On Tuesday, Autorité des Marchés Financiers declared Altice’s Sept. 5 offer for the remaining 22 percent of SFR non-compliant, causing Altice to pull the plug. In a subsequent filing Wednesday, AMF said the 2.4 billion-euro ($2.7 billion) proposal didn’t provide enough information to SFR minority investors. SFR tumbled 4.4 percent Wednesday.

Absorbing SFR was part of billionaire Drahi’s plan to overhaul Altice after an acquisition binge that turned it into a global, though 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,” the company said in a statement Tuesday. It said it may appeal. The company posted a copy of the offer on its website Wednesday.

Some SFR investors had argued they were being shortchanged.

United First Partners, a brokerage and advisory firm in London, sent a letter to the AMF on Monday complaining that the exchange ratio in Altice’s proposal was too low, that valuation methods were ignored that would have increased the amount received by 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,” Stephane Mardel, co-chief executive officer of United First, said late Tuesday.

Similar concerns were noted by AMF, which said the terms of the proposed payments “remain unclear.” The regulator said SFR’s shareholders didn’t have enough information to evaluate the exchange ratio.

Board Approval

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 Tuesday.

SFR declined 4.4 percent to 25.36 euros at at the close Wednesday in Paris -- the sixth-biggest drop in the Stoxx Europe 600 Index. Altice added 0.9 percent to 16.38 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.

— With assistance by Rudy Ruitenberg

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