Altice to buy Cablevision for $17.7bn including debt

Global cable group Altice is acquiring New York-based Cablevision for $17.7bn including debt. This makes Altice as the fourth largest cable provider in the US. Cablevision's CEO James Dolan will hand over the control to a group of Europeans after the Altice deal. Altice will pay $34.90 a share in cash taking the valuation of Cablevision equity to $9.6bn. 

Just four months later its bought out deal of Suddenlink, Amsterdam-based multinational cable group Altice has decided to acquire New York-headquartered Cablevision (CVC) for $17.7billion including debt. The deal will position Altice as the fourth largest cable provider in the US. Franco-Israeli billionaire Patrick Drahi-led Altice is set to challenge the other media majors in the days to come. Cablevision's CEO James Dolan, who owns New York Knicks basketball team, will hand over the control to Altice after the deal. 

Recently Altice has bought MidWest US operator Suddenlink for $9.1bn including debt. Now, the latest buyout deal with Cablevision will strengthen Altice with 4.6million customers across 20 states in the US. According to the deal plan as unveiled by Drahi, Altice is paying premium price with an objective of establishing the foothold in the potential US market.

As per the agreed deal, Altice will pay $34.90 a share in cash taking the valuation of Cablevision equity to $9.6bn. This offer is 22 percent premium to Cablevision's stock closing price of $28.54 on Wednesday (16 September). The latest offer price is considered to be 66 percent premium when compared with the price in May. Since then stock price rose amid rumors of the takeover bid. 

In those days, Drahi and the US billionaire John Malone were battling to take over Time Warner Cable. However, John Malone-led Carter Communications and Liberty Global won the deal to acquire Time Warner Cable for $78.7bn. 

Cablevision provides cable and internet services to its three million subscribers. The most of the subscriber base is concentrated in and around New York city. Cablevision also runs a newspaper titled Newsday in addition to few local cable news channels. 

Cablevision's CEO James Dolan, who owns New York Knicks basketball team, will hand over the control to a group of Europeans after the Altice deal. Altice is expected to save $900mn from the combined entities' operational efficiencies and economies of scale.

Private equity (PE) firms BC Partners and the Canada Pension Plan Investment Board hold 24 percent stake in Suddenlink. Both these firms have been given an option take shareholding up to 30 percent in Cablevision.

The Altice buying price puts Cablevision at $18bn including debt as against the current market value of $7.9bn. The deal is considered to be one of the largest merger and acquisitions (M&A) deals in the US this year. 

Amsterdam-based Altice has operations spreading from France to Israel. The market capitalization of Altice stands at euro24billion ($27.1bn). Cablevision stock rose 16 percent after the Wall Street Journal (WSJ) published the news about the Altice deal.   

Drahi said that the acquisition would reinforce his presence in the US market. "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," said Drahi.

The capital structure of Cablevision will be maintained separately from Suddenlink. However, both the companies will work with management and creating a group with 4.6million customers. This facilitates both the companies in utilizing operational efficiencies and economies of scale to explore the national platform to enhance business volume.