Drahi’s French Fiber Sale Said to Stall Over Valuation Concerns

Vinicy Chan, Benoit Berthelot and Pamela Barbaglia, Bloomberg News

(Bloomberg) -- Telecom tycoon Patrick Drahi’s planned sale of a controlling stake in his French fiber optic company XpFibre is stalling due to disagreements over price, people with knowledge of the matter said.

Some potential buyers made offers valuing XpFibre at around €6 billion ($6.5 billion) to €7 billion including debt, according to the people. Drahi, who owns 50.01% of XpFibre through Altice France, has been seeking a valuation of about €8 billion or more, the people said.

Negotiations have hit an impasse for now due to the wide gap, they said, asking not to be identified because the information is private. Private equity firms KKR & Co. and Global Infrastructure Partners were among those pursuing the XpFibre stake, the people said.

French investment firm Ardian also studied the business, according to the people. Deliberations are ongoing, and it’s possible that Altice will still be able to reach an agreement with a bidder.

Representatives for Altice, Ardian, GIP and KKR declined to comment.

Drahi is working to reduce the approximately $60 billion debt load across his sprawling telecommunications operations, and he launched a sale process for several assets last year, including the XpFibre stake. XpFibre builds fiber-to-the-home infrastructure that delivers high-speed internet access across France.

Altice France, the entity that owns the majority stake in XpFibre, told creditors in March they would have to take a hit on what they’re owed in order to achieve a new leverage target. In May, Altice France put its majority stake in XpFibre into an unrestricted subsidiary — moving the holding into a vehicle that isn’t subject to some debt covenants. The move potentially allows the parent company to raise new money in a way that’s detrimental to existing creditors or sell assets without giving them the proceeds.

The rest of XpFibre is owned by a consortium led by OMERS Infrastructure, which acquired a 49.99% stake in 2019 for €1.7 billion, valuing the unit at €3.4 billion, according to a statement at the time.

--With assistance from Irene García Pérez and Swetha Gopinath.