What's going on?
The founder of Altice Europe rang round the telecoms and media giant’s other investors on Friday, offering to buy out their public stakes in the company for a combined $3 billion.
What does this mean?
Altice’s first boss remains by far its largest shareholder – and through his investment firm he’s offering the company’s other investors a 25% “premium” to what their Amsterdam-listed shares were worth on Thursday, valuing the entire business at almost $6 billion. If they accept, Altice Europe will once again become a private company, although sister company Altice USA will stay public.
While Altice’s board of directors has recommended investors take the money and run, some analysts argue the offer lowballs what the company’s actually worth. Its French founder may be taking advantage of the 42% collapse in Altice’s share price so far this year; that fall’s accelerated recently, while the average European telecom stock is down just 17% for 2020.
Why should I care?
For markets: Forever in your debt.
Telecoms companies are famed for their ability to borrow huge sums, which they can customarily comfortably repay from the steady cash flows their long-term recurring service contracts provide. But when the going gets tough both bond- and shareholders tend to get going, piling on pressure in the form of steeper interest rates on future borrowing, for one. While Altice Europe’s plans to invest in growth and reduce its debt won’t change once it’s taken private, it may be able to achieve those goals more easily without the regular and intense interrogation of public investors and analysts.
The bigger picture: Operator: please hold.
Altice isn’t alone in looking to “delist”: German startup hub Rocket Internet said earlier this month it’d buy back its shares from investors and take the company off the stock market. After seeing its share price lose over half its value since “going public” in 2014, Rocket too has decided a better way to conduct its sometimes controversial business is in private investors’ pockets.