The hedge fund investor Polygon has kicked off potential opposition to Orange's bid to buy out minority shareholders in Orange Belgium. In a letter to the company, Polygon said Orange Belgium could be worth as much as twice what the French parent is offering, if assets such as its mobile towers are monetised.
Polygon European Equity Opportunity Master Fund said it represents interests totaling 5.29 percent of Orange Belgium's shares. In a letter sent to the Orange Belgium board, it outlined the concerns about the bid and invited the independent directors on the board to discuss the matter.
The letter called Orange's buy-out offer of EUR 22 per share "frankly, derisory" and an attempt to take advantage of the drop in share prices during the covid-19 pandemic. Based on Orange Belgium's growth profile and assets, the shareholders see a fair price in the range of EUR 39.5 to 47.25 per share.
They said it was likely Orange would look to monetise the around 3,100 mobile towers in Belgium, as it's doing in other countries. With an average value of EUR 300,000 per tower in recent similar transactions in Europe, Orange could generate significant cash from a sale-leaseback deal, with only a modest impact on EBITDA. Polygon estimates Orange Belgium's valuation overall at 6 to 7.5 times EV/EBITDA based on trading multiples of peers.
