Europe’s Altice to Acquire Cablevision in $17.7 Billion Deal

James Dolan - H - 2015
Associated Press

It will create the fourth-largest U.S. cable firm.

It’s Official: Europe’s Altice has agreed to acquire Cablevision Systems in a deal valued at $17.7 billion, including cash and debt, the companies announced early Thursday European time.

The acquisition of Cablevision represents Altice’s next step in the U.S. market, following the announced acquisition of Suddenlink earlier this year. The transaction will create the fourth-largest U.S. cable operator.

Under the agreement, Altice, founded by John Malone protege Patrick Drahi and headquartered in Luxembourg, will pay $34.90 in cash for each Cablevision share, a 22.3 percent premium over Wednesday's closing stock price.

The Dolan family has long controlled Cablevision and despite repeated rounds of deal chatter over the years previously never sold the cable operator that focuses on the New York area. Cablevision serves more than 3.1 million residential and business customers.

"As a family business we are proud to be entrusted by the Dolan family with the ownership of Cablevision and look forward to continuing the pioneering path they have paved for us," Drahi said.

"Since [my father] Charles Dolan founded Cablevision in 1973, the Dolan family has been honored to help shepherd our customers and employees through the most extraordinary communications revolution in modern history," Cablevision CEO James Dolan said on behalf of the family. "Now, nearly half a century later, the time is right for new ownership of Cablevision and its considerable assets."

He added: "We believe that Patrick Drahi and Altice will be truly worthy successors, and we look forward to doing all we can to affect this transition for our customers and employees. We expect that Cablevision will be in excellent hands."

"With approximately 65 percent of its cable customers subscribing to triple-play services, Cablevision generates industry-leading average revenue per user and benefits from high customer loyalty," the companies said in announcing the deal. Cablevision's revenue amounted to $6.53 billion and its adjusted operating cash flow to $1.86 billion for the 12 months ended June 30.

The Cablevision transaction, which follows Charter Communications' deal for Time Warner Cable, which is being reviewed by regulators, and the recent acquisition of DirecTV by AT&T, has an enterprise value of $17.7 billion, the companies said. Altice is paying $10 billion in cash and taking on $7.7 billion in debt.

"As part of Altice, Cablevision will benefit from additional international operational expertise, enhanced scale and further investment support that are at the core of the Altice business model and strategy," Altice said. "While operating with independent capital structures, Cablevision and Suddenlink will draw upon management from both companies creating a leading communications services and technology group in the U.S. market with 4.6 million customers in 20 states. Both companies will benefit from this national platform and from operating efficiencies and economies of scale."

The deal is expected to close in the first half of 2016 following regulatory approvals. No further shareholder approval is needed as "holders of shares representing a majority of the outstanding of voting power of Cablevision delivered written consents approving the transaction," the companies said.

Altice is a multinational cable, fiber, telecom and content company focused on Western Europe, namely France, Belgium, Luxembourg, Portugal and Switzerland, as well as Israel and overseas territories, such as the French Caribbean and the Dominican Republic).

Said Altice founder and president Drahi: "The strategy of Altice in the large and highly strategic U.S. 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.”

The Dolan family will continue to control AMC Networks and the Madison Square Garden Co., which the cable operator made separate stock market-listed companies in recent years.