Altice acquisition of Charter is more likely if Charter has a deal with Sprint.
Altice NV and its U.S. branch may have started to prepare a bid to acquire Charter in what could be at least a $185 billion deal, according to a report from CNBC on Wednesday, Aug. 9. Charter may be tempted to take this bid if they have a deal with Sprint, according to analysts.
The European company has a $22.6 billion debt, which is not too far off from the company’s net worth of $23 billion. Charter is said to be worth around $180 billion, including all debts but excluding a takeover premium, according to Reuters. Altice would need to use its resources to come up with the funds needed for this acquisition. It is said that Altice executives are thinking about asking the Canada Pension Plan Investment Board and BC Partners to help fund this bid, according to Bloomberg citing sources.
Charter shareholders may not want to get involved with a company that has significant debts. Liberty Broadband and its chief John Malone are the biggest investors in Charter, and a deal with Altice may not sit well with them.
“Altice would need to fund a significant portion of the offer to public shareholders in cash for it to be accretive to them,” said a New Street Research investor note. “This would likely require them to bring in a partner. The most compelling would be a strategic partner like Softbank or Comcast.”
Altice is also not without competition. There is no guarantee that a Charter-Sprint merger would entice Charter to be acquired by Altice. A Charter-Sprint merger deal was rebuffed by the cable operator, but analysts believe that if Charter was to get involved with Sprint, then it would be open to more opportunities, such as this potential deal with Altice.
Charter has so far stood by its decision to not get involved with Sprint, but reports of a potential agreement between the cable operator and the carrier have not subsided.
Altice was founded in 2001 by French-Israeli billionaire Patrick Drahi. The telecom conglomerate focuses on providing fiber and mobile broadband for its over 50 million customers. Altice has made a several acquisitions in the past few years, including the acquisition of Cablevision for $17.7 billion last June and prior to that the acquisition of Suddenlink for $9.1 billion in 2015.