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Lucerne Capital accuses billionaire of ‘unlawful’ behaviour in Altice Europe share buy-back

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The long-term shareholder alleges “egregious” governance and says it will take Patrick Drahi to court over the terms of proposed deal.

The billionaire Patrick Drahi’s plans to buy back shares in Altice Europe and have total control of the group have hit an obstacle.

Lucerne Capital Management, a minority shareholder with about €94 million shares in the company, has outlined its objections in a letter to the Altice Europe’s board and told Dutch newspapers that it intends to pursue its claims at the enterprise chamber of the district court in Amsterdam, where Altice is listed

Price too low

The hedge fund says the proposed purchase price of €4.11 per share is too low: the share price has fallen from a peak of €6 earlier in the year to about €4 now.

Also that the deal is unfair to minority shareholders and that the structure of the deal is illegal under Dutch law.

Lucerne questions the validity of the opinion on fairness provided for the Altice Europe Board of Directors by LionTree Advisors, and says there are "egregious corporate governance incidents" resulting in the transfers of massive wealth from Altice Europe to Patrick Drahi.

Lucerne also opposes the Altice Europe’s governance structure, whereby Drahi maintains control via a system of two classes of shares.

Drahi announced his plans to buy back shares in Altice Europe in September.

• Separately, Reuters reported that the European Commission approved the proposed acquisition of French fibre optics operator by rival SFR FTTH controlled by Altice, Allianz and Omers, subject to conditions.

Originally the Commission had concerns that the takeover would reduce competition in the wholesale market for fibre-to-the-office (FTTO) networks and could shut retail competitors from access to Covage’s fibre capacity at wholesale level.

Covage only sells fibre network access on the wholesale market, while SFR FTTH is active in both wholesale and retail markets.
As a remedy, the parties agreed to sell most of Covage’s FTTO business and to offer assets and services required to operate this divested business for a transitional period, which the Commission accepted.