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Drahi eyes Eutelsat acquisition

September 30, 2021

By Chris Forrester

Telecoms tycoon Patrick Drahi, having earlier this month bought a large slice (12.1 per cent) of BT, has made a bid to buy Eutelsat.

Drahi is said to have offered a €2 (17 per cent) premium over Eutelsat’s current €10.35 share price. Drahi controls the cellular and cable business Altice.

A September 30th statement from Eutelsat confirmed that the proposal received from Drahi prices Eutelsat at €12.10 per share, all dividend attached.

Eutelsat says its “relevant governance bodies” have rejected the bid. Eutelsat is the world’s third-largest satellite operator with a market capitalisation of some €2.4 billion.

However, sources including Reuters and Bloomberg, report that Drahi has held pre-bid talks with BpiFrance, which holds a near-20 per cent stake in Eutelsat , and presumably could be in favour of the move.

Eutelsat, in a statement on September 29th after the Paris bourse had closed, described Drahi’s bid as “preliminary” and “non-binding” stressing its terms were not good enough to start negotiations.

Key to any potential success for Drahi is the 7.58 per cent holding by Fonds Stratégique de Participations investment house. China Investment Corp (CIC) has a 6.73 per cent stake. Some 65 per cent is in a free float.

But market analysts say they cannot see much scope for synergies between Drahi’s other businesses and Eutelsat. Eutelsat itself has been on a two-year cost reduction exercise to trim fat from the company.

Giles Thorne, an analyst at investment bank Jefferies, says it is impossible to say with any conviction why Eutelsat would be of interest to Drahi at this point. “We are not bereft of ideas (a track record of telecoms value-investing; some strategic alignment with Drahi assets in France / French-speaking Africa), but none hold particular weight. This feels as incongruous as his successful 2019 bid for auction house, Sotheby’s! In our view, Eutelsat has been in value territory for some time, but its candidacy for acquisition was far better suited to in-market consolidation (which these headlines may now precipitate). In the meantime, tomorrow could see a sharp squeeze in this popular short.”

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