French telecoms billionaire Patrick Drahi has raised his offer to buy out minority shareholders in Altice Europe by almost a third, bowing to pressure from hedge funds that threatened to sue to secure a higher price.
The entrepreneur, who already owns almost 78 per cent of Altice Europe, launched a bid to take the Amsterdam-listed telecoms company private in September, pitching the offer at a 24 per cent premium to the share price. The board of Altice Europe recommended that offer.
However, hedge funds, including Lucerne and Winterbrook, agitated for a higher offer, arguing that the price significantly undervalued the telecoms business. Legal action was launched in both the US and Amsterdam to uncover documents and challenge the deal.
Earlier this month Altice defended its offer, saying it had valued the business above its European peers. But on Wednesday Mr Drahi, via his Luxembourg-based vehicle Next Private, opted to raise the cash offer to €5.35 a share from €4.11. The billionaire said this represented a 61 per cent premium to the Altice Europe share price prior to the September bid.
The move values the stake held by minority shareholders at about €3.2bn, up from the €2.5bn tabled in September. In a statement, Next Private said it would fund the offer through third-party debt financing and equity.
A number of funds including Boussard & Gavaudan, Elliott, LB Partners, Sessa, Sheffield and Winterbrook — which together represent 9 per cent of Altice Europe’s shares — have agreed to the revised offer. Litigation proceedings have been withdrawn.
Altice Europe was originally floated in 2014 to fund Mr Drahi’s acquisition spree in European telecoms, including the takeover of SFR in France for €17bn later that year and Portugal Telecom in 2015 for €7.4bn.
The group then entered the US market with two cable acquisitions, but its large debt pile and deteriorating performance in France sent the shares into freefall in 2017. It later split off its US business into a separate vehicle. Altice has said that it has returned 2.3 times on equity since the float factoring in the US split.