Suddenlink counts around 1.5 million residential and 90,000 business customers in Texas, West Virginia, Louisiana, Arkansas and Arizona. The company generated USD 2.3 billion in revenue and over USD 900 million in EBITDA in 2014. After investing well in its broadband network, Suddenlink has a strong operational and financial growth track record, Altice said in a statement, adding the US company should benefit from the operational expertise, scale and investment support of the Altice business model.
The acquisition gives Suddenlink an enterprise value of USD 9.1 billion, equal to 7.6 times EBITDA including potential synergies. The transaction is to be financed with USD 6.7 billion of new and existing debt at Suddenlink, a USD 500 million vendor loan note from BC Partners and CPP Investment Board, USD 1.2 billion of cash from Altice and the remainder the roll over by BC Partners and CPP Investment Board. Debt at Suddenlink will remain ring-fenced so the leverage at Altice does not affect the company. The transaction is expected to close in the fourth quarter, pending regulatory approvals.
Suddenlink CEO Jerry Kent said Altice's backing should help the company take on the role of "a major consolidator" in the US cable industry. Kent said he would leave Suddenlink once the takeover by Altice is completed. An earlier report in the Wall Street Journal suggested that Altice is also looking at a bid for Time Warner Cable, the second-largest cable operator in the US. While Altice is smaller and already has significant debt, the company expects it could raise enough cash to make an offer for TWC. A source familiar with the matter said that Altice had already made initial contact with TWC.
