Recommended public cash offer by Next Private B.V. for all issued and outstanding common shares A and common shares B of Altice Europe

AMSTERDAM–(BUSINESS WIRE)–Regulatory News:

This is a joint press release by Altice Europe N.V. (“Altice Europe“) and Next Private B.V. (the “Offeror“), a direct subsidiary of Next Alt S.à r.l. (“Next Alt“) which is owned and controlled by Mr. Patrick Drahi, the founder of Altice Europe, pursuant to the provisions of Article 5 paragraphs 4 and 5, Article 6 paragraph 2, Article 10, Paragraph 3 and Article 18, Paragraph 3 of the Dutch Decree on Public Takeover Bids (Besluit openbare biedingen Wft) (the “Decree“) in connection with the public offer by the Offeror for all issued and outstanding common shares A and common shares B in the capital of Altice Europe (the “Offer“). This press release does not constitute an offer, or any solicitation of any offer, to buy or subscribe for any securities. Any offer will be made only by means of the offer memorandum dated 24 November 2020 (the “Offer Memorandum“), which is available as of today. This press release is not for release, publication or distribution, in whole or in part, in or into, directly or indirectly, any jurisdiction in which such release, publication or distribution would be unlawful.

• Offer memorandum approved by the AFM
• Offer to be discussed at Altice Europe EGM on 7 January 2021 at 11:00 CET
• Offer period from 25 November 2020 to 21 January 2021 (unless extended)
• Non-conflicted board members fully support and recommend the offer
• Offeror fully supports Altice Europe’s long-term strategy

Transaction highlights

• Recommended public offer for Altice Europe of EUR 4.11 in cash (cum dividend) for each issued and outstanding common share A and each issued and outstanding common share B.
• Thorough process conducted by the non-conflicted directors, including all independent, non-executive directors, safeguarding the independence of the deliberations and decision-making.
• After having carefully reviewed the Transaction (as defined below), the Board (as defined below) believes that the Transaction promotes the sustainable success of Altice Europe’s business and is in the interest of Altice Europe and its stakeholders, including its Shareholders (as defined below), employees, customers, debt providers and suppliers.
• The Board fully supports and unanimously recommends the Offer.
• The Offer Price (as defined below) represents a premium of 23.8% over the closing price on 10 September 2020 prior to the announcement of the Offer, and a premium of approximately 16.5% over the 180 day VWAP prior to the announcement.
• The Offeror is controlled by the founder of Altice Europe, who fully supports Altice Europe’s long-term strategy and is committed to the long-term interests of Altice Europe and its stakeholders.
• The offer period commences on 25 November 2020 at 09:00 hours CET and expires on 21 January 2021 at 17:40 hours CET, unless extended.
• Altice Europe will hold an extraordinary general meeting on 7 January 2021 at 11:00 hours CET, at which the Offer will be discussed and certain resolutions in connection with the Offer will be proposed to the general meeting.
• The Offer is subject to fulfilment of the offer conditions as set out in the Offer Memorandum.
• The Offer is expected to complete in the first quarter of 2021.
• Following the Offer, the Offeror and Altice Europe intend to as soon as possible delist Altice Europe and, if so desired by the Offeror, have the Offeror acquire 100% of Altice Europe or all of its assets and operations through a Compulsory Acquisition Procedure, Post-Offer Merger, Post-Offer Asset Sale or one or more Post-Settlement Restructurings (all as defined below).

With the publication of the Offer Memorandum today, and with reference to the joint press release by the Offeror and Altice Europe dated 11 September 2020, the Offeror and Altice Europe hereby jointly announce that the Offeror is making a recommended public offer for all issued and outstanding common shares A and common shares B in the share capital of Altice Europe (the “Listed Shares“, and the holders of Listed Shares, the ”Shareholders”) at an offer price of EUR 4.11 in cash per Listed Share (cum dividend) (the ”Offer Price”). Terms not defined in this press release will have the meaning as set forth in the Offer Memorandum.

The Offer

The Offeror is making the Offer on the terms and subject to the conditions and restrictions contained in the Offer Memorandum. Shareholders tendering their Listed Shares under the Offer will be paid the Offer Price in consideration for each Listed Share validly tendered (or defectively tendered provided that such defect has been waived by the Offeror) for acceptance pursuant to the Offer prior to or on the Closing Time (as defined below) (each such Listed Share, a ”Tendered Share”) that is not validly withdrawn and which is transferred to the Offeror.

The Offer Price is ‘cum dividend’. Consequently, if any distribution on the Listed Shares is declared by Altice Europe whereby the record date for entitlement to such distribution is on or prior to the Settlement Date (as defined below), then the Offer Price will be decreased by the full amount of any such distribution made by Altice Europe in respect of each Listed Share (before any applicable withholding tax).

The Offeror will fund the Offer through third-party debt financing. The debt financing, which may be syndicated, is fully committed on a “certain funds” basis.

Strategic rationale

The rationale for the Offer, the delisting of Altice Europe and, to the extent relevant, the relevant Post-Offer Restructuring (as defined below) (together, the “Transaction“) is that the Offeror and Altice Europe believe that having Altice Europe operate without minority shareholders and without a listing on Euronext Amsterdam (or any other stock exchange) is better for the sustainable success of its business and long-term value creation. In view of, amongst others, its high debt capital structure and related high volatility of the share price and the lack of use of the Listed Shares as acquisition currency, the disadvantages of the listing materially outweigh the benefits. The Offeror and the Board believe that the business can more successfully focus on the long-term following delisting in a wholly-owned set-up, including pursuant to the following advantages:

1. increasing the ability of Altice Europe and its subsidiaries and other group companies (excluding, for the avoidance of doubt, any direct or indirect shareholders of Altice Europe) (the “Group“) to achieve the goals set out in, and implement the actions of, its strategy (of which the core focus is on customers, revenue, profitability and cash flow growth and, as a result, deleveraging);
2. the ability to implement and focus on achieving long-term strategic goals and operational achievements of the Group, as opposed to short-term performance driven by quarterly reporting, for example by increasing the Group’s ability to accelerate and implement investment decisions when it is most efficient, rather than having to perform in line with what the public market is expecting;
3. avoid the current volatility of the share price of the Listed Shares (e.g., resulting from Altice Europe’s high debt to equity ratio), which will (i) unlock the opportunity to improve the effectiveness of employee incentive plans, and thus better align senior management with the business strategy of the Group and improve the retention of the employees of the Group and (ii) improve Altice Europe’s reputation vis-à-vis and relationship with its stakeholders such as bond holders and other finance providers, clients, suppliers, employees and local governments;
4. a better access to the bond and bank markets independent of the daily and volatile share price fluctuations of the Listed Shares and thus decrease borrowing costs, as finance providers will focus more on fundamental valuation and credit analysis;
5. the ability to achieve an efficient capital structure (notably from a financing perspective), which would, amongst others, facilitate intercompany transactions, dividend distributions and elimination of inefficient intercompany flows; and
6. reducing the Group’s costs (e.g., listing, financial reporting, staff/management and board costs will decrease, there will no longer be a requirement for physical general meetings of Altice Europe and the current legal holding structure can be simplified).

With reference to the Non-Financial Covenants, the Offeror fully supports the long-term strategy of the Group. The Offeror and Altice Europe believe that Altice Europe operating in a private setting will enhance the ability to execute on the Group’s long-term strategy.

Corporate Governance

The Offeror does not intend to change the composition of the board of Altice Europe (the ”Full Board”) prior to or at the Settlement Date. It is therefore envisaged that after the Settlement Date, the Full Board will be composed of the same persons as the current members of the Full Board (each member of the Full Board, a “Board Member“).

Altice Europe and the Offeror have agreed in the Merger Agreement that, subject to applicable law, after the Settlement Date, the Offeror may, at its sole discretion, procure any appointments and dismissals of Board Members, provided that the Offeror shall ensure that the Full Board (or in the event of a Post-Offer Restructuring, the board of Company Sub (as defined below) or the Offeror or the board of the Offeror’s nominee who will purchase Altice Europe’s assets and operations, as applicable) shall include at least two independent non-executive directors, whereby ‘independent’ shall have the meaning as described in the Dutch Corporate Governance Code 2016 (the “Independent Non-Executive Directors“) for at least twelve months after the Settlement Date.

As long as the Listed Shares are listed on Euronext Amsterdam, Altice Europe shall continue to comply with the Dutch Corporate Governance Code (except for deviations that find their basis in the Merger Agreement, as disclosed in the Offer Memorandum, and other deviations in accordance with the “explain” requirement in respect of such deviations). Current deviations from the Dutch Corporate Governance Code by Altice Europe are described in Altice Europe’s annual report for the financial year 2019. There are currently no intentions for post-Settlement (as defined below) deviations from the Dutch Corporate Governance Code by Altice Europe other than the current deviations and deviations that find their basis in the Merger Agreement.

Non-Financial Covenants

Altice Europe and the Offeror have agreed that the Offeror shall, in accordance with the terms and subject to the conditions of the Merger Agreement, comply with the Non-Financial Covenants in respect of, inter alia, strategy, employees, financing and disposals for a duration of twelve months after the Settlement Date.

At least two Independent Non-Executive Directors will continue to serve on the Full Board for at least the duration of the Non-Financial Covenants and shall be tasked in particular with monitoring compliance with the Non-Financial Covenants.

The Non-Financial Covenants are set out in full in Section 6.14 (Non-Financial Covenants) of the Offer Memorandum and include the following:

Strategy

The Offeror fully supports the strategy of the Group and will continue to work with Altice Europe with a shared ambition to grow the business in a manner that reflects the current business strategy of the Group. The Offeror does not envisage any material changes to the operations and business activities of the Group and will seek to capitalise the increased business opportunities that Altice Europe will have in a non-listed setting, including increasing the investments in its infrastructure.

Employees

Existing employee rights and benefits will be respected, as will the Group’s current employee consultation structure. No reductions of the Group’s operating companies’ workforce and no material reduction of Altice Europe’s workforce is expected as a consequence of the Transaction or completion thereof.

Financing

The Offeror and Altice Europe will ensure that the Group will remain prudently financed to safeguard the business continuity and to support the success of the business. The Offeror supports the Group’s deleveraging strategy. The Offeror will use its commercially reasonable efforts to ensure that the Transaction does not have a negative impact on the Group’s debt ratings.

Disposals

The Offeror will not dispose any material strategic asset or any material business operated by the Group.

Unanimous support and recommendation by the Board

From the moment Next Alt (and later the Offeror) made clear it was considering and exploring the possibility to take Altice Europe private through an all-cash public offer for all Listed Shares, the Board held calls and meetings on a frequent basis to be updated on the latest developments, to monitor the process and to discuss the Offer.

In the deliberations and decision-making process, it was considered whether any of the Board Members had a direct or indirect conflict of interest within the meaning of article 2:129(6) DCC or was related to the Offeror Group. The President, the Vice-President and the CEO, executive Board Members, have been determined to have a conflict of interest in respect of the Transaction. Consequently, they (and, for the avoidance of doubt, the Vice-President’s permanent representative, Mr. Okhuijsen) have not participated in the deliberations and decision-making of the Board with respect to the Transaction.

Consistent with its fiduciary responsibilities, the Full Board excluding the President, the Vice-President and the CEO (the “Board“), with the support of its financial and legal advisors, and separately the non-executive directors with their own financial and legal advisors, have carefully reviewed the Transaction and have given careful consideration to all aspects of the Transaction, including: the strategic rationale of the Transaction, financial aspects (such as the Offer Price), the non-financial aspects (such as the Non-Financial Covenants and other operational and social aspects), and deal certainty.

The Board has taken the interests of all stakeholders, including the minority shareholders, into careful consideration. The Board has unanimously determined that the Offer represents a fair price and attractive premium to all Shareholders, as well as favourable non-financial terms to the other stakeholders who will also benefit from the Transaction through their continued involvement with Altice Europe in the private set-up. The Board concludes that the Transaction promotes the sustainable success of Altice Europe’s business and is in the interest of Altice Europe and its stakeholders, including its Shareholders, employees, customers, debt providers and suppliers.

In connection with the Transaction, Lazard Frères SAS (“Lazard“) has issued a Fairness Opinion to the Company and LionTree Advisors UK LLP (“LionTree“) has issued a Fairness Opinion to the Non-Executive Directors. The full text of the Fairness Opinions, each of which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with each such opinion, is included in the Position Statement (as defined below).

The Board unanimously supports the Transaction, recommends to the Shareholders to accept the Offer and to tender their Listed Shares pursuant to the Offer and recommends Altice Europe’s shareholders to vote in favour of the resolutions relating to the Transaction (the “Resolutions“) at the EGM (as defined below).

The Position Statement sets forth the recommendation and a more elaborate explanation on the Board’s decision-making process. The Board may amend or revoke its recommendation if any material event, material development, material circumstance or material change in circumstances or facts occurs or arises that causes the Board to determine in good faith, after consultation with its outside legal and financial advisors and the Offeror, that the failure to amend or revoke the recommendation would be inconsistent with the fiduciary duties of the Board Members under Dutch law.

Extraordinary general meeting of Altice Europe

Today, Altice Europe has convened an extraordinary general meeting (the “EGM“), to be held on 7 January 2021 at 11:00 hours CET. Separate convocation materials are made available by Altice Europe on its website (www.altice.net). At the EGM, the Offer will be discussed in accordance with the provisions of Article 18, Paragraph 1 of the Decree and the Resolutions will be proposed to the general meeting. Subject to the terms and conditions of the Offer Memorandum, the Board unanimously recommends voting in favour of all Resolutions.

Regulatory clearance

The Offer is subject to obtaining the relevant clearances from the Israeli Ministry of Communications and the Israeli Cable and Satellite Broadcasting Council in connection with the Transaction. The Offeror and the Company are in the process of obtaining such clearances and expect the process to be successfully completed prior to the end of the Offer Period.

Undertakings of certain Board Members

Mr. Paulmier and Mr. Sauvaire, both non-executive Board Members holding Listed Shares (together representing less than 0.01% of Altice Europe’s issued share capital), have undertaken to tender all their Listed Shares under the Offer, under the same terms and conditions as the other Shareholders, subject to (i) the Merger Agreement not having been terminated in accordance with its terms and (ii) no permitted Adverse Recommendation Change having occurred. Both Mr. Paulmier and Mr. Sauvaire will vote their Listed Shares, or cause such Listed Shares to be voted, in favour of the Resolutions, subject to the same conditions.

Mr. Paulmier and Mr. Sauvaire did not receive any information from the Offeror or Altice Europe relevant for a Shareholder in connection with the Offer that is not included in the Offer Memorandum.

Treatment of certain stock options and preference shares B

Pursuant to the provisions of Article 5, Paragraphs 4 and 5 and Article 6, Paragraph 2 of the Decree, the following is disclosed.

The Company and Mr. Weill (the CEO) have agreed that (a) Mr. Weill will convert 551,548 preference shares B held by him into 551,548 common shares A before 12 January 2021 and (b) subject to and upon either initiation of a Compulsory Acquisition Procedure, execution of the notarial deed to effect the Triangular Merger (as defined below) or execution of the Asset Sale Agreement, Mr. Weill will transfer 752,568 preference shares B held by him for no consideration to Altice Europe and (c) Mr. Weill will retain his right to acquire up to a maximum of 50 million preference shares B (depending, inter alia, on the extent to which the pre-determined allocation key linked to performance criteria is met), whereby (i) in case of initiation of a Compulsory Acquisition Procedure, and subject to a resolution of the Company’s general meeting, such right will be retained at the level of the Company with necessary changes to the terms and conditions in connection with and upon Delisting, (ii) in case of the Triangular Merger, a roll-over of such right to the level of Company Sub will be effected upon execution of the notarial deed to effect the Triangular Merger with necessary changes to the terms and conditions in connection with such roll-over and (iii) in case of the Asset Sale, a roll-over of such right to the level of the Offeror (with potentially a further roll-over to the level of the Offeror’s nominee that will purchase the Company’s assets and operations at the completion of the Asset Sale) will be effected upon execution of the Asset Sale Agreement with necessary changes to the terms and conditions in connection with such roll-over. Mr. Weill intends to tender his Listed Shares under the Offer.

Mr. Drahi, Next Alt and Next Luxembourg S.C.Sp have renounced the stock options for Shares A held by them, in each case subject to and upon (i) initiation of a Compulsory Acquisition Procedure, (ii) execution of the notarial deed to effect the Triangular Merger or (iii) execution of the Asset Sale Agreement, as the case may be. For the avoidance of doubt, the stock options remain in full force and effect until the occurrence of any event described in (i), (ii) or (iii) in the preceding sentence.

Offer Period

The Offer Period will commence on 25 November 2020 at 09:00 hours CET and will expire on 21 January 2021 at 17:40 hours CET (such period, as it may be extended from time to time, the “Offer Period“), unless the Offer Period is extended. The day on which the Offer Period expires, whether or not extended, is the ”Closing Date” and 17:40 hours CET on the Closing Date is the ”Closing Time”.

Listed Shares tendered on or prior to the Closing Time may not be withdrawn, subject to the right of withdrawal of any Tendered Shares during the Offer Period in accordance with the provisions of Article 5b, Paragraph 5, Article 15, Paragraphs 3 and 8 and Article 15a, Paragraph 3 of the Decree.

Acceptance

Shareholders are requested to make their acceptance known through their custodian, bank or stockbroker no later than by the Closing Time. The relevant custodian, bank or stockbroker may set an earlier deadline for communication by holders of such Listed Shares in order to permit the custodian, bank or stockbroker to communicate the acceptance to ING Bank N.V. (the ”Settlement Agent”) in a timely manner. Accordingly, Shareholders should contact such financial intermediary to obtain information about the deadline by which such Shareholder must send instructions to the financial intermediary to accept the Offer and should comply with the dates set by such financial intermediary, as such dates may differ from the dates and times noted in the Offer Memorandum.

The institutions admitted to Euronext Amsterdam (an “Admitted Institution“) can tender Listed Shares only to the Settlement Agent and only in writing. There are no holders of Listed Shares individually recorded in Altice Europe’s shareholders’ register.

Subject to Article 5b, Paragraph 5, Article 15, Paragraphs 3 and 8 and Article 15a, Paragraph 3 of the Decree, the tendering of Listed Shares in acceptance of the Offer will constitute irrevocable instructions by the relevant Shareholder to the relevant Admitted Institution to (i) block any attempt to transfer such Listed Shares, so that on or before the Settlement Date no transfer of such Listed Shares can be effected (other than any action required to effect the transfer to the Offeror); (ii) debit the securities account in which such Listed Shares are held on the Settlement Date in respect of all such Listed Shares, against payment of the Offer Price for such Listed Shares by the Settlement Agent on the Offeror’s behalf; and (iii) effect the transfer of such Listed Shares to the Offeror.

Declaring the Offer unconditional

The obligation of the Offeror to declare the Offer unconditional is subject to the satisfaction or waiver of the offer conditions set out in Section 6.6.1 (Offer Conditions) of the Offer Memorandum (the ”Offer Conditions”). The Offer Conditions may be waived, to the extent permitted by law or by agreement, as set out in Section 6.6.2 (Waiver of the Offer Conditions) of the Offer Memorandum. If any Offer Condition is waived in accordance with Section 6.6.2 (Waiver of the Offer Conditions) of the Offer Memorandum, the Offeror will inform the Shareholders as required by applicable law.

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Contacts

Altice Europe:

Head of Investor Relations Altice Europe
Sam Wood: +41 79 538 66 82 / sam.wood@altice.net

Head of Communications Altice Europe
Arthur Dreyfuss: +41 79 946 4931 / arthur.dreyfuss@altice.net

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