Altice Floats 7 Bln Euro Offer For Oi's Portuguese Assets

(RTTNews) - French cable and telecommunications company Altice S.A. (ATCV.OB) said Monday that it has made a binding and fully financed offer to acquire the Portuguese assets of Portugal Telecom SGPS S.A. (PT) from Brazilian wireless carrier Oi S.A. (OIBR). The bid comes as part of Altice's strategy to expand in Europe, particularly in Portugal and Belgium.

Oi's Portugal Telecom holds operations in Portugal and Africa. Oi has also announced plans to sell off the African assets of Portugal Telecom, but no bid has been made yet. Meanwhile, Portugal Telecom and Oi are currently in the process of merging, which is expected to close only in early 2015.

The offer values the assets at an enterprise value of 7.025 billion euros or $8.8 billion, on a cash and debt free basis. The valuation includes a 400 million euros earn-out related to the future revenue generation of Portugal Telecom and a 400 million euros earn-out related to the future generation of operating free cash flow.

The Portuguese assets comprise the existing business of Portugal Telecom outside of Africa. However, it excludes Portugal Telecom's Rio Forte debt securities, Oi treasury shares and Portugal Telecom financing vehicles.

Luxembourg-based Altice noted that the proposed acquisition, net of financial debt and other purchase price adjustments, is expected to be funded by new debt and existing cash.

Altice makes this offer in the midst of the closing of its largest acquisition to date, the $23 billion cash and stock deal to buy French media giant Vivendi S.A.'s (VIV.L, VIVEF.PK) telecom unit SFR, which is expected to close by year end.

Reports over the weekend indicated that private equity firms Apax Partners LLP and Bain Capital LLC have also made bids for buying the assets.

A deal could be announced over the next few weeks as Oi is eager to unload the assets to raise funds for other acquisitions. Oi had hired investment bank BTG Pactual earlier in the year to assist in the divestitures.

Meanwhile, Altice is said to have been in talks with Oi and its shareholders over the past weeks and has been doing due diligence in order to prepare a firm offer for the assets.

Founded by telecom entrepreneur, Patrick Drahi, Altice is a multinational cable and telecommunications company with a presence in France, Israel, Belgium & Luxembourg, Portugal, French West Indies/ Indian Ocean Area and Dominican Republic and Switzerland.

Altice provides cable-based high quality pay television, fast broadband Internet and fixed line telephony as well as mobile telephony services to residential customers and corporate customers in certain countries.