SFR shares tumble as watchdog says no to Altice takeover

Michel Combes

French service provider SFR’s shares have fallen sharply following markets regulator the AMF’s rejection of parent company Altice’s move to take full control of the operator.

The AMF has not yet published reasons for its rejection of the plan, which would have seen Altice take over the 22.5% of the company that it does not already own in an all-share offer and withdraw SFR’s separate stock market listing.

Altice said it “regrets the decision, which goes against the interests of both companies, their shareholders and employees”. The cable and telecom investment group said that the SFR board had unanimously recommended its voluntary offer, which had been deemed fair to minority shareholders in an independent assessment by Accuracy.

Altice has terminated its offer, but at the same time has said it reserves the right to file an appeal with the Court of Appeal of Paris. It also said it believed the AMF’s move was in breach of stock market regulations.

Altice said that its overall strategy and plans both in France and elsewhere remain unchanged.

Altice CEO Michel Combes immediately made it clear that he failed to understand the rationale for the decision. Combes told financial daily Les Echos that the AMF had deprived shareholders of their right to an independent choice and intimated that he believed the ruling was based on an analysis of the economic terms of the agreement rather than any wider policy issue, citing as evidence the fact that he had been interrogated by the regulator on ratio of exchange of shares proposed by Altice.

Altice’s offer, which proposed a relatively small premium, has been contested by SFR minority shareholders who have argued that it is insufficient and have questioned Altice’s motives, suggesting the acquisition is less about simplifying the company’s structure and more about gaining full access to SFR’s dividend.

Shareholders have also pointed out that the terms of the offer were at the lower end of Accuracy’s assessment of value and have questioned the independence of two members of the SFR administrative council that looked at the deal.