European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

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Event-Driven

<ul class="">
<li>Patrick Drahi, through Next Private launched on 24 November an agreed takeover offer for  <a href="https://www.smartkarma.com/entities/altice-europe-nv" target="_blank" data-smartkarma-citation="entities:1060:1" rel="noopener">Altice Nv A (ATC NA)</a>, with the aim of taking it private and delisting the company.
<ul>
<li>Upon announcement, the bid price represented 2.8x EV/NTM Revenue, 7.2x EV/NTM EBITDA and 23.8x EV/NTM EBIT (Capital IQ consensus). </li>
</ul>
</li>
<li>Altice is one of Europe's biggest HY issuers, rated B by S&amp;P.</li>
<li>On 30 November, the shares closed at €4.42, 7.5% above offer terms, and 7.1x EV/Forward EBITDA. The offer price takes advantage of the dismal performance of European telcos on the stock market following the onset of the Covid crisis.</li>
<li>Also, the offered consideration is:
<ul>
<li>0.5% below Capital IQ consensus median target price (out of 14 estimates).</li>
<li>25% below Capital IQ consensus average target price is €5.52 (out of 14 estimates).</li>
<li>On this basis, the price offered by Drahi seems low, and <strong>chances are that not enough shareholders accept the offer to enable Drahi to delist Altice</strong>.</li>
</ul>
</li>
<li>
<p>Minority shareholders of Altice Europe are planning to take the company to court over Drahi's offer. <strong>Lucerne Capital Management </strong>(c. 1.8% stake), a hedge fund, said they plan a case at the enterprise chamber of the district court in Amsterdam. </p>
<ul>
<li>Lucerne and other minority shareholders, like <strong>Sessa Capital</strong>, think Drahi's bid of EUR 4.11 per share is too low.</li>
<li>
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<p>According to the <strong>Dutch takeover code</strong>, the 95% threshold is the level required to delist a company and initiate squeeze-out proceedings.</p>
</div>
</li>
</ul>
</li>
<li>We have witnessed the recent case of <strong>Alfa Laval bid for Neles</strong> (see <a href="https://www.smartkarma.com/insights/neles-alfa-laval-preliminary-results-valmet" target="_blank" data-smartkarma-citation="insights:44828" rel="noopener">Neles - Alfa Laval: Preliminary Results, Valmet</a>), where Neles consistently traded above the bid price, which resulted in Alfa Laval withdrawing its offer.</li>
<li>I would wait for further share price weakness to set up a position. There may be some downside risk in the short-term, but the share price increase over the last months seems supported by gains in the number of subscribers and less concerns about debt.</li>
</ul>
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Patrick Drahi, through Next Private launched on 24 November an agreed takeover offer for  Altice Nv A (ATC NA), with the aim of taking it private and delisting the company.

Upon announcement, the bid price represented 2.8x EV/NTM Revenue, 7.2x EV/NTM EBITDA and 23.8x EV/NTM EBIT (Capital IQ consensus). 


Altice is one of Europe's biggest HY issuers, rated B by S&amp;P.
On 30 November, the shares closed at €4.42, 7.5% above offer terms, and 7.1x EV/Forward EBITDA. The offer price takes advantage of the dismal performance of European telcos on the stock market following the onset of the Covid crisis.
Also, the offered consideration is:

0.5% below Capital IQ consensus median target price (out of 14 estimates).
25% below Capital IQ consensus average target price is €5.52 (out of 14 estimates).
On this basis, the price offered by Drahi seems low, and chances are that not enough shareholders accept the offer to enable Drahi to delist Altice.



Minority shareholders of Altice Europe are planning to take the company to court over Drahi's offer. Lucerne Capital Management (c. 1.8% stake), a hedge fund, said they plan a case at the enterprise chamber of the district court in Amsterdam. 

Lucerne and other minority shareholders, like Sessa Capital, think Drahi's bid of EUR 4.11 per share is too low.


According to the Dutch takeover code, the 95% threshold is the level required to delist a company and initiate squeeze-out proceedings.




We have witnessed the recent case of Alfa Laval bid for Neles (see Neles - Alfa Laval: Preliminary Results, Valmet), where Neles consistently traded above the bid price, which resulted in Alfa Laval withdrawing its offer.
I would wait for further share price weakness to set up a position. There may be some downside risk in the short-term, but the share price increase over the last months seems supported by gains in the number of subscribers and less concerns about debt.









Altice - Next Private: Trading Above Terms

Altice NV A

Altice - Next Private: Trading Above Terms