Patrick Drahi, Franco-Israeli businessman and founder of cable and mobile telecoms company Altice Group attends the inauguration of the Altice Campus in Paris, France, October 9, 2018.
last week rejected a 2.8 billion euro bid from the telecom tycoon. The prospect of a lucrative merger with 3 billion euro rival SES may tempt the Altice owner to try a relaunch. So why is Drahi interested in Eutelsat? One draw is a share price languishing 30% below its January 2020 level, even though the pandemic barely dented its business. In that context, the 17% premium offered by Drahi, who has a keen eye for a bargain, may seem miserly. Eutelsat shares are trading above the rejected 12.1 euro per share offer, suggesting investors expect him to return.
Factoring in both companies’ U.S. refunds, the combined business would have 2.2 billion euros of net debt, roughly the same as their estimated 2021 EBITDA. If Drahi cranked up leverage to 2.5 times EBITDA, still below Eutelsat’s 3 times ratio, he could raise about 3 billion euros. That’s enough to fund a decent acquisition premium and also pay himself a hefty dividend. Drahi has followed a similar playbook of debt-funded distributions at art house Sotheby’s, which he bought in 2019.