|
 Franco-Israeli billionaire entrepreneur Patrick Drahi, who founded
Altice, has been on an expansion drive with deals worth some $30
billion this year alone, and is on track to add Portugal to his
portfolio of cable and mobile companies in France, Israel, and the
Dominican Republic.
For Oi, Brazil's largest fixed-line telephone provider, the
divestment marks the effective unwinding of its ill-fated merger
with Portugal Telecom <PTC.LS>, which hit the rocks earlier this
year when the Portuguese side lost hundreds of millions of euros in
the country's Espirito Santo banking scandal.
Shares in Altice jumped more than 5 percent to 56.87 euros in
morning trade as investors cheered the acquisition even though
Altice had to slightly raise its offer to see off a competing bid
from private equity funds Apax and Bain.
ING analyst Emmanuel Carlier estimated that the Portugal deal would
add about 9 euros per share to Altice's valuation.
"Altice announces that it has entered into an exclusivity agreement
with Oi to agree the purchase of the Portuguese assets of Portugal
Telecom," the company said in a statement.
Altice was advised by Morgan Stanley <MS.N> and Perella Weinberg on
the deal. Oi was advised by BTG Pactual <BPAC3.SA>.
The two sides will spend three weeks to finalise the acquisition and
complete due diligence.
Altice's offer valued Portugal Telecom at 7.4 billion euros on a
cash and debt-free basis, and included 500 million euros in
additional payments related to the future revenue generation of
Portugal Telecom.
Altice completed its biggest acquisition ever last Thursday when
subsidiary French cable company Numericable <NUME.PA> bought mobile
operator SFR.
Its acquisition spree this year has been fueled largely by debt, and
Altice plans to pay for Portugal Telecom in existing cash and debt.
Morgan Stanley, Goldman Sachs, JP Morgan, Credit Suisse, and
Deutsche Bank have agreed to back the Portugal bid.
In Portugal, where Altice owned two small cable companies, buying
the former state-owned monopoly Portugal Telecom would vault Altice
into prime position to compete with Vodafone and Optimus.
[to top of second column] |
PT Portugal holds 52 percent in broadband and 41.5 percent of the
mobile market in terms of revenue, according to Citigroup. Rivals
Vodafone and Nos have 41.6 percent and 16.9 percent respectively.
The sale of Oi's Portuguese assets could also touch off long-mooted
mobile consolidation in Brazil.
Oi has been working on a plan to team up with rivals in its domestic
market to buy and then break up TIM Participacoes SA, the nation's
No 2 wireless carrier.
But Oi needed to dispose of some assets to lower its debt burden,
currently at about 46 billion reais, as it tries to avoid breaching
covenants with bondholders early next year.
A source with direct knowledge of the situation told Reuters last
month that Oi, Telefonica and America Movil will place a bid worth
32 billion reais for TIM, which is 67 percent controlled by Telecom
Italia, and then seek to split it among them.
The bid could be presented within days after the Portugal Telecom
deal is confirmed, analysts and bankers said.
(Fixes currency in second paragraph to dollars from euros)
(Additional reporting by Alexandre Boksenbaum-Granier; Editing by
Andrew Callus and Susan Thomas)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
