European telecom magnate Patrick Drahi and his Altice SA have agreed to purchase Cablevision (NYSE: CVC) for $17.7 billion and the assumption of debt, the New York MSO confirmed. The deal would create the fourth-largest cable operator in the United States, behind Comcast, Charter Communications and Cox Communications, and the country's seventh largest pay-TV operator. Cablevision counts around 2.8 million pay-TV customers.
"We believe that Patrick Drahi and Altice will be truly worthy successors, and we look forward to doing all we can to affect this transition for our customers and employees," Cablevision CEO James Dolan said in a statement. "We expect that Cablevision will be in excellent hands."
Rampant speculation that Drahi would buy Cablevision dates back to May, when Altice paid $9.1 billion for a controlling interest in Suddenlink and boldly declared its interests to acquire U.S. cable assets. When coveted Time Warner Cable (NYSE: TWC) agreed to Charter Communications' (NASDAQ: CHTR) bid, all eyes turned to Bethpage, N.Y.-based Cablevision as Drahi's next target.
Cablevision shareholders have already approved the transaction, which calls for Altice to pay $34.90 in cash for each Cablevision Class A and Class B share. Cablevision said it expects the deal to clear regulatory hurdles in the first half of 2016.
"For the Dolan family, we move forward with AMC Networks and The Madison Square Garden Company -- two and, eventually, three public companies -- all born of Cablevision and each with brighter prospects today than ever before," Dolan said.
Cablevision's stock rose 16 percent following reports late yesterday that the MSO was in advanced talks with Altice.
In fact, Cablevision stock has been steadily rising since the Altice rumors started last spring, tempered by analyst reports that the MSO has too much competitive overlap with Verizon FiOS. However, with Cablevision reporting only 16,000 lost video subs in the second quarter, and Dolan declaring FiOS "unprofitable," momentum has swung the MSO's way in recent weeks.
The deal puts five of the top nine cable companies in a state of merger, with Charter buying not only TWC, but Bright House Networks, as well.
In connection with the deal, Altice received financing commitment letters from JP Morgan, BNP Paribas and Barclays. Altice advised Cablevision that up to $5.8 billion of Cablevision and CSC Holdings debt will remain outstanding after the transaction is closed.
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