Saturday, 23 January 2021

Is Altice Europe’s takeover by its billionaire founder unlawful?

by Harry Baldock, Total Telecom
Friday 04 December 20

Lucerne Capital Management, which holds around €94 billion shares in the company, says it will go to court over the “egregious corporate governance incidents”

Back in September, Patrick Drahi (pictured), the billionaire founder of Altice Europe, announced that he would be taking the company private through a €2.5 billion takeover via his company Next Private. Drahi already owns 77.6% of the company. “This transaction will allow Altice Europe to more successfully and effectively achieve its goals in a private and fully owned environment…

Back in September, Patrick Drahi (pictured), the billionaire founder of Altice Europe, announced that he would be taking the company private through a €2.5 billion takeover via his company Next Private. Drahi already owns 77.6% of the company.

“This transaction will allow Altice Europe to more successfully and effectively achieve its goals in a private and fully owned environment, benefiting from the founder’s ongoing long-term commitment to the business,” said Altice Europe’s chairman, Jurgen van Breukelen at the time.

However, not all stakeholders in the business are pleased with this development. 

Lucerne Capital Management, which holds around €94 billion shares in the company, has today announced major objections to the takeover, suggesting that the share price is too low and that Patrick Drahi himself stands to gain enormous personal wealth from the deal due to “egregious” governance. 

The price proposed for the acquisition is €4.11 per share – a far cry from the €6 peak the company saw earlier in the year. 

Lucerne also argues against the legality of the deal, since Dutch law states that minority shareholder should be given a reasonable exit opportunity, which they had not been given.

“As you are aware, the vast majority of Altice Europe’s minority shareholders believe that the public offer is nothing more than an illicit attempt by Mr Drahi to exploit the Covid-19 pandemic to yet again transfer massive value to himself, to the detriment of the minority shareholders,” read a letter from Lucerne to Altice Europe’s board.

“For this reason, the offer is set up in a way that the minority shareholders are forced to sell their shares at a price pre-determined by Mr Drahi, regardless of their level of willingness to accept the offer price voluntarily. As it is structured in a pre-wired fashion, and as Mr Drahi already has the required majority to vote through the pre-wired restructuring measures himself, Mr Drahi is apparently hoping to push out the minorities quickly while avoiding any sort of scrutiny of the price by the courts,” the piece continued. 

Lucerne said that it will pursue its legal claims at the district court in Amsterdam, where Altice Europe is listed. 

 

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