Cablevision Systems Corporation (NYSE:CVC) has agreed to a sales agreement with Altice, for 100% of CVC shares, at an average price of $34.90 per share. The news has caught significant media attention, in the past few days, which also includes an investigation initiated by Levi & Kosinsky LLP. However, some analysts still believe that the sale has unlocked great value for CVC shareholders. These analysts state that Altice has paid more than CVC was worth as a standalone entity. The decision had been driven by the fact that Altice believes that it can help the company run more efficiently.
The CEO of Altice, Patrick Drahi, stated that he intended to bring European cost structures to the US cable market. He expressed his views during the Goldman and Sachs investor conference, stating that as a customer he would like to pay as little as possible for quality entertainment, but the current cost structure of CVC does not reflect on that. He also emphasized on broadening the customer base.
Furthermore, CVC has recently been under fire for concentrating the majority of its resources on just a few of its segments. Drahi intends to change this trend and analysts expect him to outsource parts of the diverse business, so as to improve efficiency within the company. Additionally, Drahi has also expressed his thoughts on cutting expenses within the company. He emphasized on the elimination of a number of top management positions and hiring more skilled laborers.
However, the most immediate problem that CVC would face is the investigation of the sales agreement, by Levi & Korsinsky. The law firm believes that the deal has been underpriced and the directors of the company are trying to conduct financial fraud through the deal. If the deal goes ahead as planned, it could be the beginning of some major changes in the US cable space.
Cablevision Systems Corporation (NYSE:CVC) experienced trade volumes of 11.72 million shares during the September 21 session and reported a decline of 0.03% to reach a close at a stock price of $33.12.