Drahi's Altice Files for U.S. Unit IPO to Fuel Acquisitions

(Bloomberg) -- Billionaire Patrick Drahi’s Altice NV filed for an initial public offering of its U.S. cable-TV business, as the European mogul exploits stock-market gains to create currency for further expansion.

Altice and its co-investors, Canada Pension Plan Investment Board and BC Partners, will each sell some of their Altice USA Inc. holdings in what promises to be one of the year’s biggest IPOs. A preliminary regulatory filing on Tuesday offered no details on how much stock each would sell or valuations. Altice USA was formed from two U.S. acquisitions, Cablevision Systems Corp. and Suddenlink, in the past two years, for more than $26 billion including some debt.

Drahi has spent the past several years expanding his operations in Israel, Europe and the U.S., using record-low interest rates to acquire wireless companies and cable-TV providers. Altice and the two funds are exploring the sale of about 20 percent of the U.S. business, giving the billionaire an American listing and stock he can use to pay for additional targets amid rapid consolidation in the U.S. industry, people familiar with the matter said last week.

“We intend to opportunistically grow through value-accretive acquisitions," Altice USA said in the filing. “We believe the U.S. broadband communications and video services market offers a number of attractive opportunities to grow our business through strategic acquisitions.”

Altice gained 1.5 percent to 21.50 euros at 2:06 p.m. in Amsterdam. The shares have advanced 14 percent this year.

The U.S. unit may be valued at $25 billion to $30 billion, Les Echos reported on Tuesday, citing people familiar with the matter. The French newspaper said Altice will sell about $2 billion in stock in the IPO.

Closely held Cox Communications Inc. is one potential target for Altice, one of the people said last week. The funds, which hold about 31 percent of the unit, plan to offer most of the stock, the people said then. BC Partners and Canada Pension Plan were co-owners of Suddenlink and invested alongside Altice when it paid $17.8 billion for Cablevision in 2016.

Surging stock prices after Donald Trump’s election victory have opened the door for companies to list stock in the U.S., and indexes that track broadcast and cable companies have outstripped market gains since November.

The U.S. pay-TV business has consolidated rapidly over the past few years, leaving Altice USA with few large, obvious targets. AT&T acquired DirecTV in 2015, and Charter Communications Inc. last year acquired Time Warner Cable for $55.1 billion and Bright House Networks to become the No. 2 cable-TV provider behind Comcast Corp.

As telecommunications services converge, opportunities may arise to combine cable operations with wireless providers, as Amsterdam-based Altice did with Numericable and SFR Group in France.

Altice USA had 2016 revenue of about $9.2 billion and $3.4 billion of adjusted earnings before interest, taxes, depreciation and amortization on a pro forma basis, according to Tuesday’s filing. The filing listed a placeholder amount of $100 million being offered that will be revised once plans firm up.
U.S. IPOs have raised $13.7 billion this year, led by Snap Inc.’s listing in March, according to data compiled by Bloomberg. That’s almost double what companies amassed in the same period last year, the data show.

JPMorgan Chase & Co., Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. are managing the Altice USA IPO, according to the filing.

--With assistance from Amy Thomson

To contact the reporter on this story: Alexandre Boksenbaum-Granier in Paris at aboksenbaumg@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Phil Serafino