Hedge fund Lucerne Capital, an investor in Altice Europe NV, has raised objections to billionaire Patrick Drahi’s plan to take the company private, saying his offer undervalues the company.
Altice’s founder and largest shareholder made an offer Sept. 11 to pay 4.11 euros a share through his Next Private vehicle, valuing the entire company at 4.9 billion euros ($5.8 billion). That represented a 24% premium over the previous day’s closing price.
The offer represents a “significant discount” to the shares, and is designed to squeeze out minority investors, the hedge fund wrote in a letter to the French telecommunications company’s board Thursday.
Lucerne Capital, founded in 2000, said it represents funds owning about 94 million euros of Altice Europe shares.
A representative for Altice was unable to provide immediate comment.
“Mr. Drahi is using the temporary lull in the share price, caused by Covid-19, to unlock the huge upside in value for himself and others with equity exposure only, to the detriment of the minority shareholders,” the hedge fund wrote.
Read More: Billionaire Drahi’s Altice Bid Smacks of Opportunism: Alex Webb
The stock could more than triple to 15 euros, Pieter Taselaar, Greenwich, Connecticut-based Lucerne Capital’s founder, said in November. After five years of price wars in the French telecommunications market, all players are getting more rational on pricing, he said at the time.
Lucerne also raised issues on Thursday about the potential for the minimum acceptance level of 95% to be waived and an information imbalance between Drahi and other investors.
(Updates Altice representative comment in fifth paragraph.)