Altice Acts Fast to Use Newly Found Financial Flexibility
Cable tycoon Patrick Drahi uses equity and debt to finance $10 billion Cablevision deal
PARIS— Altice NV, in snapping up Cablevision Systems Corp. in a $10 billion debt- and stock-financed deal, has moved unexpectedly swiftly to make the most of a more financially flexible corporate structure put in place a little more than a month ago.
Patrick Drahi, the Franco-Israeli entrepreneur who founded Altice, changed the company’s domicile to the Netherlands from Luxembourg partly to take advantage of the country’s flexible corporate codes which allow companies to have dual shareholding structures.
Altice created two classes of stock so that Mr. Drahi, who owns 58.5% of the stock, retains 92% of the company’s voting power. The move allows Altice to issue new class A shares, with fewer voting rights, without diluting its billionaire founder’s control.
The group had previously relied on borrowing money to finance more than $40 billion in acquisitions in France, Portugal and the U.S. in the 18 months before buying Cablevision.
To finance this latest deal, Altice plans to raise $7 billion in new debt but also issue $3 billion in new shares, while it will also take on more than $7 billion in debt on Cablevision’s books.
Combining Cablevision with its smaller rival Suddenlink, which Altice bought for $9 billion four months ago, will create the fourth largest cable operator in the U.S., and possibly give Altice further flexibility for future deal making.
The company would “clearly” look at listing its U.S. cable assets in the future if only to give Altice’s newly acquired private-equity partners a chance to exit, said Chief Executive Dexter Goei.
BC Partners and CPP Investment board have an option to take up to 30% of Cablevision’s equity, Altice said.
Hearing takeover chatter circulating - LBO by Leonard Green speculation circulating
Euro Zone officials are mulling a debt relief plan to limit Greece debt servicing costs to 15% of GDP
Gapping up
In reaction to strong earnings/guidance: SYMX +21.2%, LAKE +13.6%, MLHR +11.2%
M&A news: CVC +16.5% (Cablevision to be acquired by Altice (ATCEY) for $34.90 in cash, or ~$17.7 bln), WMB +1.2% (Bloomberg reporting co is close to being acquired by Energy Transfer Equity LP (ETE))
Other news: CANF +39.3% (announces Fast Track Designation for its CF102 in the Treatment of Liver Cancer), TGTX +15.2% (reaches an agreement with the FDA for a Special Protocol Assessment on the design of its Phase 3 clinical trial of TG-110), YGE +11.1% (enters into an agreement with CFC Group Construction Limited, to supply 170 MW of solar panels for utility-scale power plants in China's Hebei province), APRI +9.7% (reports top-line Phase 2a data for RayVa; no significant safety or tolerability issues observed), SQNM +8.7% (signs a national agreement with UnitedHealthcare Insurance Company), REN +6.7% (announced agreement to sell its Hilight Field assets in the Wyoming Powder River Basin for $55 mln; proceeds to be used to reduce debt), EGY +3.5% (reported that its North Tchibala 1-H well has been brought online at a rate slightly in excess of 3,000 gross barrels of oil per day), RLYP +3.2% (announced results of Phase 1 Phase 1 onset-of-action study of Patiromer for Oral Suspension were published in Kidney International; Patiromer FOS rapidly and significantly reduced blood potassium from baseline levels in patients with moderate-to-severe hyperkalemia), APD +3.1% (announces Intent to spin-off Materials Technologies Business), NETE +2% (co closed on $1.59 mln of insider financing), AEO +1.7% (Exec Chairman & Interim CEO disclosed purchase of 500K shares, worth total of $7.87 mln), AEO +1.7% (co's Exec Chairman & Interim CEO disclosed purchase of 500K shares, worth total of $7.87 mln), OCRX +1.4% (announced initiation of Phase 1 clinical trial in healthy subjects to evaluate oral prototype solid-dose, extended-release formulations of OCR-002)
Analyst comments: ITCI +6.6% (target raised to $62 at RBC Capital Mkts), MXL +1.7% (upgraded to Buy from Neutral at Needham), NVDA +1.3% (upgraded to Buy from Hold at Jefferies)
In reaction to strong earnings/guidance: SYMX +21.2%, LAKE +13.6%, MLHR +11.2%
M&A news: CVC +16.5% (Cablevision to be acquired by Altice (ATCEY) for $34.90 in cash, or ~$17.7 bln), WMB +1.2% (Bloomberg reporting co is close to being acquired by Energy Transfer Equity LP (ETE))
Other news: CANF +39.3% (announces Fast Track Designation for its CF102 in the Treatment of Liver Cancer), TGTX +15.2% (reaches an agreement with the FDA for a Special Protocol Assessment on the design of its Phase 3 clinical trial of TG-110), YGE +11.1% (enters into an agreement with CFC Group Construction Limited, to supply 170 MW of solar panels for utility-scale power plants in China's Hebei province), APRI +9.7% (reports top-line Phase 2a data for RayVa; no significant safety or tolerability issues observed), SQNM +8.7% (signs a national agreement with UnitedHealthcare Insurance Company), REN +6.7% (announced agreement to sell its Hilight Field assets in the Wyoming Powder River Basin for $55 mln; proceeds to be used to reduce debt), EGY +3.5% (reported that its North Tchibala 1-H well has been brought online at a rate slightly in excess of 3,000 gross barrels of oil per day), RLYP +3.2% (announced results of Phase 1 Phase 1 onset-of-action study of Patiromer for Oral Suspension were published in Kidney International; Patiromer FOS rapidly and significantly reduced blood potassium from baseline levels in patients with moderate-to-severe hyperkalemia), APD +3.1% (announces Intent to spin-off Materials Technologies Business), NETE +2% (co closed on $1.59 mln of insider financing), AEO +1.7% (Exec Chairman & Interim CEO disclosed purchase of 500K shares, worth total of $7.87 mln), AEO +1.7% (co's Exec Chairman & Interim CEO disclosed purchase of 500K shares, worth total of $7.87 mln), OCRX +1.4% (announced initiation of Phase 1 clinical trial in healthy subjects to evaluate oral prototype solid-dose, extended-release formulations of OCR-002)
Analyst comments: ITCI +6.6% (target raised to $62 at RBC Capital Mkts), MXL +1.7% (upgraded to Buy from Neutral at Needham), NVDA +1.3% (upgraded to Buy from Hold at Jefferies)
Gapping down
In reaction to disappointing earnings/guidance: CLC -9.3%, ARCW -7.1%, TEX -4.7%, SANW -4.2%, RAD -4.2%, ORCL -2.4%
M&A news: PRGO -1.2% (unanimously rejects Mylan's (MYL) unsolicited exchange offer, calling it 'inadequate' ), ATML -1.1% (China Electronics considering $8.50/share buyout of ATML, according to Bloomberg)
Select EU financial related names showing weakness: LYG -2.1%, NBG -2.1%, HSBC -1.7%
Select metals/mining stocks trading lower: AUY -1.9%, GOLD -1.9%, VALE -1.6%, RIO -1.4%, HMY -1.2%, MT -1.1%
Other news: BTU -12% (announced 1-for-15 reverse stock split following shareholder approval), FIT -2.7% modest pull back pre-mkt following yesterday's gains)
Analyst comments: UBNT -2.5% (downgraded to Underperform from Market Perform at BMO Capital), MRTX -1.2% (downgraded to Neutral from Overweight at Piper Jaffray), HAS -1.1% (downgraded to Neutral from Buy at Goldman
)
In reaction to disappointing earnings/guidance: CLC -9.3%, ARCW -7.1%, TEX -4.7%, SANW -4.2%, RAD -4.2%, ORCL -2.4%
M&A news: PRGO -1.2% (unanimously rejects Mylan's (MYL) unsolicited exchange offer, calling it 'inadequate' ), ATML -1.1% (China Electronics considering $8.50/share buyout of ATML, according to Bloomberg)
Select EU financial related names showing weakness: LYG -2.1%, NBG -2.1%, HSBC -1.7%
Select metals/mining stocks trading lower: AUY -1.9%, GOLD -1.9%, VALE -1.6%, RIO -1.4%, HMY -1.2%, MT -1.1%
Other news: BTU -12% (announced 1-for-15 reverse stock split following shareholder approval), FIT -2.7% modest pull back pre-mkt following yesterday's gains)
Analyst comments: UBNT -2.5% (downgraded to Underperform from Market Perform at BMO Capital), MRTX -1.2% (downgraded to Neutral from Overweight at Piper Jaffray), HAS -1.1% (downgraded to Neutral from Buy at Goldman
)