Altice Enters Exclusivity Deal With Oi To Buy Portugal Telecom For EUR 7.4 Bln

(RTTNews) - French cable and telecommunications company Altice S.A. (ATCV.OB) agreed Sunday to acquire the Portuguese assets of Portugal Telecom SGPS S.A. (PT) from Brazilian wireless carrier Oi S.A. (OIBR).

Altice and Oi have entered into an exclusivity agreement to finalize the terms of the deal that values Portugal Telecom at an enterprise value of 7.4 billion euros or $9.2 billion, on a cash and debt-free free basis.

The fully financed, binding offer includes 500 million euros consideration related to the future revenue generation of Portugal Telecom.

The two companies will now work towards finalize a firm agreement. The final agreement will require corporate approvals and will be subject to standard regulatory approvals.

Altice's offer topped a bid from private equity firms Apax Partners LLP and Bain Capital LLC, which teamed up with Portuguese conglomerate Semapa, to make an offer of more than 7 billion euros for the assets.

The move is part of Altice's strategy to expand in Europe, particularly in Portugal and Belgium. The deal, net of financial debt, accrued post-retirement liabilities and other purchase price adjustments, will be financed by new debt and existing cash from Altice.

On November 2, Altice initially floated an offer valued the assets at an enterprise value of 7.025 billion euros or $8.8 billion, on a cash and debt free basis. The offer had then included only 400 million euros earn-out.

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.

The agreement comes close on the heals of Altice closing 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 was agreed in June.

Oi is eager to unload the assets to raise funds for paying down debt and for other acquisitions. Oi had hired investment bank BTG Pactual earlier in the year to assist in the divestitures.

Altice is said to have been in talks with Oi and its shareholders over the past few 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.