By Ruth Bender and Shayndi Raice
PARIS--Deal-hungry Altice SA Sunday said it has entered
exclusive talks to buy Portugal's former telecom monopoly from its
Brazilian owner for EUR7.4 billion, as the Luxembourg telecom group
nears its second-largest deal since buying French mobile company
SFR.
Altice and Oi SA have entered an "exclusivity agreement" to
agree on the final terms of a deal for PT Portugal, Altice said in
a statement late Sunday, elbowing out a rival bid from a group of
private-equity firms.
The deal for PT Portugal marks the latest in a series of mergers
in Europe where telecom companies including Orange SA and Vodafone
PLC seek to merge fixed with mobile assets with the aim to offer
so-called quadruple-play offers that bundle mobile, broadband,
fixed telephony and TV services-- which generate higher
profits.
If the deal goes ahead, the expansion in Portugal would be
Altice's next big move in its quest to become a European telecom
empire. Patrick Drahi, who started building Altice from scratch in
the 1990s by investing in underperforming cable companies, has made
clear his ambition to expand the company and combine fixed with
mobile assets.
Mr. Drahi, who controls Altice, told The Wall Street Journal in
May that Altice would like to buy more cable and mobile companies
in countries where it is already present, including Portugal,
Belgium and Israel as well as expand into other markets such as
Central and South America.
Altice currently has a small presence in Portugal via operators
Cabovisão and Oni. The acquisition of the former monopoly, which
has both fixed and mobile operations, would elevate Altice's
position in the country to a key player next to Vodafone Group PLC
and NOS.
Altice's EUR7.4 billion offer is slightly higher than the
company's initial bid, which came before Apax Partners and Bain
Capital LLP joined the race to buy PT Portugal with a joint bid
valuing the Portuguese telecom company at EUR7.07 billion ($8.8
billion).
Altice said its latest binding offer for PT Portugal is fully
financed and includes a EUR500 million consideration related to the
future revenue generation of the Portuguese telecom company. The
group had initially made a bid valuing PT Portugal at EUR7.03
billion, including two EUR400 million earn outs related to the
future revenue and operating cash flow generation of the
company.
As the race to buy the Portuguese company grew more intense, the
private equity consortium and Altice both made deals with local
companies to try to score bonus points. Apax and Bain last week
said they joined forces with Portuguese conglomerate Semapa in
their joint bid while Altice Friday said it would team up with
Portuguese postal services company CTT if its bid for PT Portugal
were successful.
The exclusive talks over PT Portugal come just days after Altice
completed its largest purchase ever with the $23 billion
acquisition of French telecom firm SFR from Vivendi SA.
But despite facing a large debt load with the SFR purchase,
Altice has signaled that it is still hungry for more. In France--by
far Altice's biggest market--the company could buy smaller rival
Bouygues Telecom next. At an industry conference in Barcelona last
week, the group's Chief Executive Dexter Goei said Altice would be
interested in buying Bouygues Telecom if its parent Bouygues SA was
up for selling it.
Write to Ruth Bender at Ruth.Bender@wsj.com and Shayndi Raice at
shayndi.raice@wsj.com
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