Altice USA Inc, the cable operator that Netherlands-based Altice NV formed by acquiring Cablevision and Suddenlink Communications, said on Wednesday it had raised US$1.9 billion in an initial public offering.
Taking Altice USA public will give Altice’s founder, French billionaire Patrick Drahi, traded shares in the company which he can then use as currency in new acquisitions in order to expand what is already the fourth-biggest U.S. cable provider.
Altice USA priced 63.9 million shares at US$30, within its indicated price range of US$27 to US$31, making it this year’s second largest U.S. IPO and giving the company a market capitalization of approximately US$22 billion.
There has only been one IPO of a U.S. cable company in the last five years, WideOpenWest Inc, which last month raised about US$310 million in an IPO, pricing below its expected range.
Most sizeable cable companies are already public. Those that are not often seek scale by being acquired rather than going public. Last month, private equity firm TPG said it would buy Wave Broadband for US$2.37 billion, to combine it with its existing investments, RCN Telecom Services LLC and Grande Communications Networks.
A wave of deal-making has swept the U.S. cable sector over the past few years, as consumers have dropped cable-providers in favor of internet streaming, forcing many companies in the sector to slash prices as they compete for subscribers.
Some analysts have said that Altice USA could harbour ambitions to one day take on large acquisition targets such as Charter Communications Inc and privately held Cox Communications.
Altice USA, which operates in 21 states, had US$9.2 billion in pro forma annual revenue in 2016. It has said it plans to use IPO proceeds to pay down some of its roughly US$21 billion in debt.
Altice USA’s parent is a European and Israeli telecoms and cable empire that Drahi has built through debt-heavy acquisitions. It will hold 70.3 percent of Altice USA’s shares and 98.3 percent of the voting rights in the company thanks to a separate bundle of stock.
London-based private equity firm BC Partners and Canada Pension Plan Investment Board, two pre-existing minority investors in Altice USA, will jointly own a minority stake in the company.
JPMorgan Chase & Co, Morgan Stanley, Citigroup Inc and Goldman Sachs Group Inc are joint bookrunners on the IPO.
Altice USA will list on Thursday on the New York Stock Exchange under the ticker ‘ATUS’.
(Reporting by Lauren Hirsch in New York and Liana B. Baker in San Francisco; Editing by Chris Reese and Lisa Shumaker)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Chip East