Analysts view the move as largely benefiting the conglomerate since it essentially assigns economic values to two distinct business verticals, de-linking its European operations with that of its U.S. business and at the same time boost liquidity.
In a strategic move designed to reassure investors, Altice NV disclosed that its board had approved plans of spinning off its U.S. divisions from that of its European operations. The move is aimed at simplifying communications across its sprawling empire that bridges two continents and two distinct markets – Europe and the United States.
With its U.S. operations being shielded from that of its European business, it would make a parting payment of $1.5 billion as dividend, which will again, improve Altice NV’s balance sheet.
In 2017, the conglomerate’s performance in Europe was questioned by investors; as a result Patrick Drahi returned as its CEO in November while Michel Combes, resigned as its Chief Executive.
The conglomerate has identified a turn around in its operations in France and Portugal as its top European goals.
“Altice USA’s shares have suffered from guilt by association with the weaker results at the European parent,” said Craig Moffett, an analyst at MoffettNathanson. “The biggest overhang on Altice USA shares has been the nagging concern that U.S. shareholders might somehow be called upon to backstop weakness in Europe. That risk will now be gone.”
Altice NV, which will now be renamed as Altice Europe, plans on completing the spin off of its 67.2% interest in Altice USA by the end of the second quarter of 2018, subject to shareholder and regulatory approvals.
As per Jonathan Chaplin, an analyst at New Street Research, the deal will raise the economic stake of its U.S. operation to 42% from its current 10% and significantly increase liquidity.