Altice has made an offer to acquire the 22.5% of French service provider subsidiary SFR that it does not already own and has unveiled plans to further tighten up its procurement processes, including by acquiring key suppliers, and to launch a new content studio and channel operation.
Altice is offering SFR shareholders eight new class A Altice shares in exchange for five SFR shares, in a deal that has secured the approval of the respective boards of each company. The exchange is not subject to any ownership threshold.
Altice said the goal was to simplify the group’s ownership structure and enhance organizational flexibility. It held out to SFR shareholders the prospective benefits of being able to diversify into higher growth markets, particularly in the US, with the additional incentive of participating in the upside of its ongoing restructure of US assets within Altice USA.
Other incentives highlighted include continued exposure to the French market, which Altice said still accounted for 47% of its business, and increased weighting of “more scalable” fixed and cable assets than is the case with SFR alone. Altice said the fixed and cable segment now accounted for 70% of its business.
The offer, which is expected to close in the fourth quarter, has been submitted for approval by the French market regulator the AMF and its Dutch equivalent.
Because Altice already has a controlling stake in the French operator, SFR’s board has appointed an independent expert, Accuracy, to assess the fairness of the proposed transaction under the supervision of the independent directors, in accordance with the AMF’s rules, and has appointed Perella Weinberg Partners to act as financial advisor to the company.
The move to integrate SFR more fully came as Altice unveiled plans to invest further in content creation and further centralise core strategic, operational and technical functions.
Altice is to create Altice studios to create new original movies and series, and Altice Channel Factory, to create more new channels following the launch of a raft of services under the SFR brand in France.
Altice said that its subsidiaries stood to benefit from collaboration in content – which has been a key are for the operator through its investment in SFR Media – via its international media and content organisation as part of its overall focus on convergence.
The company identified a number of key core areas of expertise from which its subsdiaries stand to benefit – including selecting strategic suppliers through centralised procurement.
As part of this, Altice said it planned to take control of networks, upgrade and maintenance supplier Parilis, including its subsidiary ERT Group, and customer services supplier Intelcia.
It said that the vertical integration of these suppliers would enable it to enhance its expertise and ensure further quality of service.
Technical core areas identified include improving network quality through upgrades and new build, improving customer relationship management through a focus on efficient IT platforms, digitisation and simplifying processes, delivering key technology services and R & D through Portugal-based Altice Labs, developing new products, services and business models, including convergent services delivered via home hubs, and branding and marketing synergies.