Daily Management Review

Altice to buy Suddenlink and enter US cable market


Altice is set to foray into the US market at a time when the cable industry is facing a paradigm shift

Israel-based cable company Altice SA is acquiring control of US-based Suddenlink Communications in a $9.1 billion deal.
The landmark deal for Altice comes in a time when the cash-rich company is trying to make inroads in new markets. This will also be the first foray into the US cable market for the company headed up French-Israeli billionaire Patrick Drahi.
The deal will be financed by Drahi’s investment arm, which has sought to buy a 70 percent stake in Suddenlink. The company had also simultaneously attempted a takeover of Time Warner Cable, which is in the market since a bid by Comcast was called off last month.
The Israeli billionaire has been aiming to foray into the US market for some time, thanks to the number of mergers the cable sector in the country has been facing. The surge of online streaming service has also affected the cable sector. Everything “below Comcast effectively is in consolidation mode,” Altice Chief Executive Officer Dexter Goei said on a conference call. “We clearly expect to be right in the middle of that consolidation.”
Shares of Altice rose 11 percent to 127.95 with the news. It has been estimated that the purchase values Suddenlink at 9.8 times its projected 2015 earnings, valuing the company at $9.1 billion.
Altice could benefit from the deal as the company will get a new foothold in the American market. Altice bought French wireless provider SFR and merged it with its own cable operator Numericable only last year and is looking at capitalizing on the low debt rates in the market. Altice was also stepping up plans for a potential takeover of smaller mobile carrier Bouygues Telecom to further cement its position in France. Suddenlink, based in St. Louis, has about 1.5 million residential and commercial customers in more than a dozen states, primarily in Texas, Oklahoma, Arkansas, Louisiana, North Carolina and West Virginia.
Time Warner Cable is also in the market and Altice could target the company with its foothold in Suddenlink even when Time Warner Cable’s market capitalization is about $46 billion, while Altice has a value of $35 billion.
For Suddenlink, this is the second time the company is on sale. The company changed hands as recently as in 2012 when it was bought by BC Partners Ltd. and a Canada pension fund for $1.99 billion from a group of investors which included Goldman Sachs Group Inc.