Altice has struck again in the US, and this time they hit a bigger target. The European telecommunications group has agreed to buy Cablevision in a $17.7B deal. The deal will pay out $34.90 per share, a 22% premium above the current stock price.
Earlier this year Altice surprised the market with plans to purchase Suddenlink in one of the first significant M&A forays by a European operator on this side of the Atlantic since the dot com bubble. But once the move had been made, it was clear that more would be coming from Altice. Supposedly they took a hard look at TW Cable, and some even suggested Verizon's wireline business could fit, but Cablevision makes a whole lot more sense to me.
In buying Cablevision, Altice buys a significant but very geographically focused asset, with cable systems in New York, New Jersey, and Connecticut reaching 3.1M customers. In the same geography they also get to own Lightpath, which has a deep footprint more than 7,000 lit buildings and 5,800 route miles of fiber that reaches deep into both the SMB and larger enterprise markets. Interestingly, they also get to own the newspaper 'Newsday' and the local news channel News 12 Networks.
As with the Suddenlink purchase, this probably is not the end of the story. Altice will surely be looking for additional cable assets to consolidate into its US footprint. And while his first two have been cable operators, I don't think it's a stretch to see him looking at other infrastructure assets as well.
The deal will be financed via a combination of cash and shares, with the investment funds BC Partners and CPP Investment Board agreeing to buy up to 1/3 of Cablevision to help make it happen. It will take some regulatory scrutiny of course, but I doubt there will be objections.
And so, Cablevision customers will probably soon exchange a fiery but ultimately conservative Irish-American billionaire patriarch, John Dolan, for a similarly fiery but rather unpredictable French-Israeli billionaire patriarch, Patrick Drahi.