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Lucerne Capital objects to formal offer from next private to acquire Altice Europe

Lucerne Capital Management (“Lucerne”), a registered investment adviser managing funds that own approximately EUR 94 million of shares of Altice Europe N.V. (ATC.AS) (“Altice Europe” or the “Company”), announced today that it has delivered a letter to the Altice Europe Board objecting to the formal all-cash offer of EUR 4.11 per share for all common shares A and common shares B of Altice Europe by Next Private B.V. (the “Offer”).

As a long-term shareholder of Altice Europe stock, Lucerne outlines in its letter its objection to and serious concerns about the price of the Offer and Altice Europe’s historical and ongoing corporate governance practices, as well as calls into question the legality of the structure of the Offer. Below is a summary from Lucerne’s letter, the full text of which can be found here:

“As you are aware, the vast majority of Altice Europe’s minority shareholders believe that the public offer is nothing more than an illicit attempt by Mr Drahi to exploit the Covid-19 pandemic to yet again transfer massive value to himself, to the detriment of the minority shareholders. For this reason, the offer is set up in a way that the minority shareholders are forced to sell their shares at a price pre-determined by Mr Drahi, regardless of their level of willingness to accept the offer price voluntarily. As it is structured in a pre-wired fashion, and as Mr Drahi already has the required majority to vote through the pre-wired restructuring measures himself, Mr Drahi is apparently hoping to push out the minorities quickly while avoiding any sort of scrutiny of the price by the courts.

Lucerne believes that this scheme is unlawful under Dutch law. It remains incomprehensible to Lucerne that the independent members of the Board, led by Mr Van Breukelen, would lend themselves to rubber stamp such an obviously improper scheme. Given the prior behaviour of the “independent” members of the Board in allowing Messrs Drahi and Weill to extract hundreds of millions of euros from the company through related party transactions and other schemes, we have serious concerns in relation to your judgment where it concerns related party transactions involving Mr Drahi. We urge you now to consider seriously our questions and concerns and to engage with us, instead of choosing to hide behind various legal and financial advisors and their opaque and increasingly incomprehensible recommendations and opinions.

The documentation published on 24 November 2020 does nothing to address the concerns voiced by the overwhelming majority of the minority shareholders. The artificial addition of the “Adverse Recommendation Change” is, in essence, meaningless, as the wording clearly shows that the Board may not make any such Adverse Recommendation Change at all, except in extremely narrow circumstances which will never materialize.

Coming up with artificial solutions which provide no actual protection for minority shareholders after the fact (even when they are “tailor-made and negotiated by the Board in light of the particularities of this Transaction”) is no substitute for the actual protections which the independent members of the Board should have agreed if they had in fact fulfilled their fiduciary duties, such as a hard acceptance threshold; Mr Drahi not being allowed to vote on items where he so clearly has a conflict of interest; and sticking to the Dutch law requirement of providing a reasonable exit opportunity for minority shareholders – which this is clearly not.

We urge the independent members of the Board to take seriously their fiduciary duties vis-à-vis the minority shareholders. If, however, the independent members of the Board are dead-set on continuing on this misguided path, you leave Lucerne and other minority shareholders with no other alternative than to request the Enterprise Chamber to order an investigation into the course of affairs and the management of Altice Europe, and to request immediate measures preventing the pre-wired restructuring measures from being brought to a vote on the 7 January 2021 EGM.” PR NewsWire

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