Eutelsat rejects surprise offer from Altice’s Patrick Drahi

Eutelsat has rejected an offer from Altice boss Patrick Drahi to acquire the company.

Drahi offered €12.10 a share for the satellite operator, a price confirmed by Eutelsat after Drahi’s move was initially reported by Reuters.

“Pursuant to market rumours, Eutelsat Communications confirms that it has received an unsolicited, preliminary and non-binding proposal from Patrick Drahi in connection with a potential transaction on all of the company’s share capital. The relevant governance bodies of Eutelsat Communications have unanimously decided not to engage in discussions based on the terms of this proposal,” Eutelsat said in a statement after the Reuters report appeared.

The company later confirmed the price, which it apparently judged to offer too small a premium. Eutelsat’s shares were trading at around €10.35 on Wednesday, before jumping after news of the bid became public.

The move took industry observers by surprise. “It is impossible to say with any conviction why Eutelsat would be of interest to Patrick Drahi at this point,” was the comment from analysts at Jefferies, arguing that the Altice founder’s bid was “as incongruous as his successful 2019 bid for auction house, Sotheby’s”.

“In our view, Eutelsat has been in value territory for some time, but its candidacy for acquisition was far better suited to in-market consolidation (which these headlines may now precipitate). In the meantime, tomorrow could see a sharp squeeze in this popular short,” Jefferies said.

Drahi recently acquired a 12.1% stake in BT, making him the UK telco’s largest shareholder. However, observers see few synergies between the tycoon’s telecom and media assets, which include SFR and Altice Media in France, Meo in Portugal and Hot in Israel, and ownership of a satellite operator with heavy exposure to the declining video broadcast business. Some observers have speculated that he may believe there is an opportunity in emerging connectivity markets such as aviation and maritime, and that he sees a possibility of turning Eutelsat into a beneficiary of disruption in the market.