Patrick Drahi’s Altice and Vivendi announced today that they now have signed the definitive agreement for the business combination of Vivendi’s mobile telephony subsidiary SFR with Altice’s French cable subsidiary Numericable.
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The definitive agreement has been signed after successfully holding a constructive dialogue with the Employee Works Councils of the two companies, as required under French law.
The Vivendi Supervisory Board had unanimously selected the Altice-Numericable offer to acquire SFR back in April, deeming the proposed transaction would create the highest growth potential, generate the highest value for its customers, employees and shareholders, while also best achieving Vivendi’s own objectives for liquidity as well.
When the deal closes Vivendi will receive consideration of US$18.3 billion (Euros 13.5 billion) in cash, not counting closing adjustments, and will also retain a 20% minority stake in the newly combined SFR-Numericable entity. The publicly listed Numericable will remain as the surviving legal entity after the merger, thus Vivendi will be able to sell shares on the market later, if it should choose to do so, after a one year lock-up period.
Patrick Drahi earlier this year raised the funds it needed in public equity markets and in the Eurobond markets to pay for the deal.
Vivendi may also receive further consideration from Altice, from an agreed additional earn-out, of up to US$1 billion (Euros 750 million), depending on the future financial performance of the newly combined group. To qualify for the earn–out the merged entity’s EBITDA minus Capital expenditure must be at least equal to US$2.7 billion (Euros 2 billion) during a full fiscal year.
Closing of the agreement remains subject to certain customary conditions, including obtaining approval from the relevant regulatory authorities, and is expected to happen later this year.
Note: EBITDA is an ugly sounding acronym commonly used in financial analysis, that stands for: Earnings before deducting Interest, Taxes, Depreciation and Amortisation.