News of European telecommunications giant Altice buying Cablevision Systems Corp. for $17.8 billion, including debt, cause the share price of the New York company to go up by 16 percent on Wednesday.
While Cablevision's stock went up to $33.12, Altice will pay a higher $34.90 per share, CNBC reports, citing sources. Cable companies in the U.S. are consolidating because of subscribers cutting their subscriptions in favor of streaming services from providers such as Netflix, Amazon and Hulu.
Besides having lower fees, streaming services are also more flexible.
The consolidations, however, could lead to more scrutiny from regulators as the telecom industry shrinks further to fewer players. Cablevision, after all, is a giant in the American cable industry and being taken over by a European company is an indicator of the sector's direction in the coming years, observes the New York Times.
Altice, owned by Patrick Drahi, a French-Israeli billionaire, also entered into a $9.1 billion agreement for its purchase of Suddenlink Communications in spring. The firm was also interested in Time Warner Cable which would instead be purchased by Charter Communications.
Altice has 3.1 million subscribers. With the addition of Cablevision customers, the company would grow to become one of the biggest in the U.S. after Comcast and Charter. But Altice would not combine yet Cablevision and Suddenlink.
The European firm would finance the takeover by selling additional and borrow money from three banks. Suddenlink's two investors - Canada Pension Plan Investment Board and BC Partners - could purchase a 30 percent stake in Cablevision as part of the deal.