: Rogers Purchasing Millions of Shares of Cogeco


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hugh
2009-11-26, 01:44 PM
from press release

Rogers Communications Inc. announced today that it has entered into agreements to purchase 3,200,000 subordinate voting shares of Cogeco Cable Inc. and 1,623,500 subordinate voting shares of Cogeco Inc. pursuant to private agreements with third parties.

Rogers Communications is acquiring the subordinate voting shares of Cogeco Cable Inc. at a cash purchase price, excluding commissions, of $36.43 per share, for aggregate consideration of $116.6 million. Rogers Communications is acquiring the subordinate voting shares of Cogeco Inc. at a cash purchase price, excluding commissions, of $28.61, for aggregate consideration of $46.4 million. RCI is acquiring the Cogeco Inc. shares and the Cogeco Cable Inc. shares for investment purposes. RCI has no current intention of acquiring ownership of or control or direction over any additional Cogeco Inc. or Cogeco Cable Inc. shares but reserves the right to acquire additional shares of Cogeco Inc. or Cogeco Cable Inc., to sell all or any portion of its holding of such shares or to enter into derivative or other transactions with respect to the shares owned by it. This press release is being issued as required under the early warning requirements of applicable securities laws.

The Cogeco Cable Inc. shares being acquired represent approximately 9.7% of the outstanding Cogeco Cable Inc. subordinate voting shares. After giving effect to these purchases, Rogers Communications will own 9,795,675 subordinate voting shares of Cogeco Cable Inc. representing approximately 29.8% of the subordinate voting shares and approximately 20.2% of the equity of Cogeco Cable Inc.

The Cogeco Inc. shares being acquired represent approximately 10.9% of the outstanding Cogeco Inc. subordinate voting shares. After giving effect to these purchases, Rogers Communications will own 5,023,300 subordinate voting shares of Cogeco Inc. representing approximately 33.6% of the subordinate voting shares and approximately 29.9% of the equity of Cogeco Inc.

hugh
2009-11-26, 01:46 PM
This is interesting.

Link to earlier purchase in 2004 (http://www.digitalhome.ca/forum/showthread.php?t=18486)

Years ago it was understood that Shaw would stay out of Southern Ontario and Rogers would stay out of the West and not go after Cogeco or Videotron.

With Shaw's recent purchase of Mountain Cable (and the admission that such gentlemen's agreement existed despite the fact they are illegal) and the death of Ted Rogers, it would appear that perhaps Rogers is looking to expand.

I expect them to go after Cogeco and try and take total control.

jokeDR
2009-11-26, 02:09 PM
quote from release,

" RCI is acquiring the Cogeco Inc. shares and the Cogeco Cable Inc. shares for investment purposes. RCI has no current intention of acquiring ownership of or control or direction over any additional Cogeco Inc. or Cogeco Cable Inc."

Yeah. Sure.

hugh
2009-11-26, 02:10 PM
That text was also in previous purchase. Simply a legal thing to avoid lawsuits.

travisc
2009-11-26, 02:33 PM
Don't the Audets have control over Cogeco? They'd need to be bought out, if so, Rogers couldn't do a hostile takeover.

GlennH
2009-11-26, 02:58 PM
This could be very interesting although I'm not sure who will be better, Cogeco or Rogers.

It may be a case of 'better the devil you know' or 'out of the frying pan, into the fire'.

leafseh
2009-11-26, 03:21 PM
6 to 1... half a dozen to the other?

hugh
2009-11-26, 03:30 PM
Don't the Audets have control over Cogeco?

I believe so BUT, if Audets decide to sell, they will want a premium. The more shares Rogers has, the less shares they will have to buy at a premium.

In other words, buy all the non-audet shares at regular price then buy the controlling shares at a premium

jpaik
2009-11-26, 04:26 PM
Interesting. With this transaction, Rogers now has 30% equity in Cogeco and 20% equity in Cogeco cable. An analyst at National Bank says this purchase would not have been made if Rogers did not plan to acquire the company (Cogeco) and its subsidiary (Cogeco Cable).

The revenue stream must be very attractive.

travisc
2009-11-26, 05:26 PM
According to cartt.ca, Rogers has also been having meetings with Bragg, owners of Eastlink.

Lindsay649
2009-11-26, 05:42 PM
And at the same time getting rid of 900 employees which they claim is a small percentage of their workforce.

nakedgord
2009-11-26, 05:55 PM
@GlennH: What are the problems people have with Rogers?

In a Cogeco service area I've looked from the outside at Rogers and found them to be much better. Some examples;

- Customers can get HD channels with digital basic compared to Cogeco where we need Digital select plus one ($52/month)

- HD boxes run as little as $100 on sale for Rogers. Best Cogeco price is $350

- Rogers offers channels like AMC and TCM which Cogeco does not.

- Max bandwidth over charge for internet on Rogers is $25. $30 for Cogeco and you're told you may still get disconnected.

- Diginets on Cogeco are $2.50 each. Rogers are $2.00 each.

thenewdc
2009-11-26, 06:39 PM
I see this as a pre-emptive move by Rogers to thwart the Possibility of SHAW trying to expand into Ontario further. Rogers may have a deal with the Audet Family already. Eastlink is likely also another target for Rogers. Time will tell.

TorontoColin
2009-11-26, 08:50 PM
Maybe Shaw will come east and we'll finally have competition in cable in Ontario.

RingtailedFox
2009-11-26, 09:06 PM
shaw used to be the main cable provider for Essex, Kent, and Lambton Counties from when they bought Trillium Cable (1995) until they fled west and sold the existing infrastructure to Cogeco (2000).. i doubt they'll be coming back, even if they wanted to. their service and reliability were HORRIBLE back then...

CamDAB
2009-11-26, 10:29 PM
I'm not one that follows the stock market that closely, but for Rogers to have control of either the Cogeco's, would they not have to hold a minumum 51% of shares for control?

Not to mention CRTC approval...

Cameron

RingtailedFox
2009-11-27, 01:38 AM
it would need 51% or more of VOTING shares... you can have the majority interest in a company and still not control it (like how Goldman-Sachs owns most of Canwest Global, but does not control it), thanks to non-voting stocks.

Momorider
2009-11-27, 10:04 AM
When I saw this item I though nice timing when they just cut a bunch of workers, probably help pay for this share acquisition. :)

scrooloose
2009-11-27, 10:18 AM
I believe the cuts were the result of Roger's outsourcing their IT department, not their financial state. Roger's isn't hurting any for money, they just want more of it!

-Mike

hugh
2009-11-27, 10:27 AM
Rogers earned over $3 billion in profits in the first nine months of the year. That's between $11 million and $12 million in profits every day.

Total amount of time to pay for $165 million in Cogeco stock out of profits - about two weeks.