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Following reports late on May 19th that it was in talks to make a US acquisition, multinational cable and telecommunications company Altice has confirmed that it has signed a definitive agreement to acquire 70 per cent of the share capital in Suddenlink, the seventh largest US cable operator, from existing shareholders BC Partners, CPP Investment Board and Suddenlink management. BC Partners and CPP Investment Board will retain a 30 per cent stake in Suddenlink.
Suddenlink has 1.5 million residential and 90,000 business customers. With operations primarily focused in Texas, West Virginia, Louisiana, Arkansas and Arizona, Suddenlink is present in attractive growth markets for both residential and business services. In 2014, Suddenlink generated $2.3 billion in revenue and over $900 million in EBITDA with a balanced revenue mix between residential video, broadband, telephony and business services.
With a well-invested, leading broadband network across its footprint, Suddenlink has a strong operational and financial growth track record. Suddenlink’s focus on service, innovation and investments provide a strong basis for extending its market leadership and growth momentum.
Suddenlink represents an excellent fit for the Altice Group and will benefit from the operational expertise, scale and investment support that are at the core of the Altice business model.
With this acquisition, the Altice Group enters the large and attractive US cable market and takes a further step in diversifying and balancing its portfolio of high-quality businesses.
The acquisition by Altice values Suddenlink at an enterprise value of $9.1 billion and values Suddenlink at 7.6x synergy-adjusted EBITDA (7.3x based on a tax-adjusted enterprise value).
The transaction is to be financed with $6.7 billion of new and existing debt at Suddenlink, a $500 million vendor loan note from BC Partners and CPP Investment Board, $1.2 billion of cash from Altice with the remainder representing the roll over by BC Partners and CPP Investment Board. Debt issuance at Suddenlink will remain ring-fenced from the existing indentures currently in place within the Altice Group, and Suddenlink will hence not be restricted under such indentures.
The transaction is expected to close in the fourth quarter of 2015 once applicable regulatory approvals have been obtained.
Dexter Goei, CEO of Altice, said the company was “very excited” about the acquisition of Suddenlink and was highly committed to continue to improve network investment, customer offers and service innovation in the attractive US market. “Our investment in Suddenlink, our first in the cable sector in the US, opens an attractive industrial and strategic avenue for Altice in the US, one of the largest and fastest growing communications markets in the world. We are looking forward to our partnership with BC Partners and CPP Investment Board and believe Suddenlink is a best-in-class business that should be able to deliver profitability and cash flow levels in line with best-in-class European cable businesses,” he declared.