Altice SA to Acquire Cablevision Systems Corporation For $10 Billion
European cable provider Altice makes its second acquisition of a US-based cable company to gain a foothold in the country’s cable market
According to European cable operator Altice SA, it is planning to buy fifth largest American company, Cablevision Systems Corporation for nearly $10 billion, as reported by Cablevision stock news. Altice is planning to step into the United States cable market, as it seems to develop the fourth biggest cable company in the United States.
Altice SA was founded in the year 2001 by Patrick Drahi, a French billionaire; it looks like the company is climbing on the list of cable operators in US with this step. In May, it closed a deal worth of $9 billion with Sudden Link Communications to buy majority of stake. Before that transaction, it already had acquired a number of European firms, Israel’s i24 News and cable operator Numericable SFR in France.
The company reported that it might pay around $34.90 per share to buy Cablevision. The contract assigns $17.7 billion of enterprise value to the company. Altice might be financing the whole transaction via $3.3 billion cash payment and $14.5 billion in debt at the company, according to Cablevision stock analysis.
Mr. Drahi has using a corporate plan in Europe for Altice that isn’t as much famous in United States at the moment, bundling mobile services, four products, fixed phone services, high speed internet and TV. On his Cablevision acquisition, he said: “The strategy of Altice in the large and highly strategic US market is reinforced with the acquisition of Cablevision. We will be in a stronger position, as in all other markets in which we operate, to deliver the best services, invest in the most advanced technology, and develop innovative products for the benefit of our customers.” He ultimately tries to generate half of his revenue from the US. By the end of current year, Mr. Drahi believes the company will be able to generate 15% of revenue from the country.
Cablevision is amongst the eighth largest Pay TV service in the United States. It is the part of the industry which is consolidating swiftly but still has some big players. DIRECTV was acquired by the AT&T Inc. earlier in July to become the biggest provider of Pay TV.
By the acquisition of Cablevision, Altice is the only company seeking to attain a foothold in the cable market of the country. This actually makes sense, keeping in mind Cablevision posted $6.5 billion in 2014 sales on $311 million of net income. Dexter Goei, Chief Executive Officer of Altice cited in a press release: “This acquisition, our second in the cable sector in the US, is the next step in Altice’s long-term oriented strategy in the US, one of the largest and fastest growing communications markets in the world.” Whereas, it isn’t that simple, as the company witnessed strong competition from Verizon Communications because of the offer of latter’s FiOS.
Cablevision stock closed at $32.50 after going green by 13.85% on Thursday, September 17.
