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Rogers to buy Cogeco (rejected)

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5K views 23 replies 11 participants last post by  MCIBUS 
#1 · (Edited)
Altice, a U.S. cable company plans to buy all of Cogeco for cash, keep Atlantic Broadband, and sell the Canadian assets to Rogers for approximately $4.9 billion. Rogers currently owns 41% of the outstanding CGO subordinate voting shares and 33% of outstanding CCA subordinate voting shares. Cogeco shareholders will receive a premium of 30+% (C$106.53 per share for the CGO SVS and C$134.22 per share for each CCA SVS.) (Rogers Press Release)

EDIT: Cogeco has said they do not support the deal.
 
#3 ·
In the short term it will mean very little. In the long term (years/decades) it'll likely mean that the equipment/technology used will be migrated to the IgniteTV package (IPTV) that Rogers currently offers to Ontario customers wherever Cogeco is the BDU. It took Rogers years/decades (and it's still ongoing) for the changes to Atlantic Canada from (formerly) Shaw to Rogers. It cost billions of $ to swap out head ends, all the customer boxes, modems, etc. Rogers kept the Shaw Motorola digital TV infrastructure there until Rogers released IgniteTV (IPTV)

Another possibility is that Rogers will even "skip" the Ignite/IPTV technology option. In the future, it's possible that all programming will be available "on-demand" instead of "broadcast," which does away with the current method of (cable BDU) delivery altogether.
 
#5 · (Edited)
I agree. The current infrastructure will be maintained for sometime in order to retain existing customers. New customers will be sold Ignite. All it needs is scaled up server and internet capacity. That's relatively simple and cheap compared to converting digital TV infrastructure and user equipment. Meanwhile, competition in the broadcasting industry will be reduced again. The real impact will be in increased costs to cover acquisition and financing that will be passed on to customers.
 
#6 ·
At this point Altice has presented an offer to Cogeco, which is controlled by the Louis Audet family through multiple voting shares. Cogeco just released a statement that the family has already indicated that it does not intend to sell its shares and will not support the proposal.

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Altice said in their press release that if the deal was accepted, closing the transactions would take six to nine months after signing definitive agreements, following receipt of necessary approvals from regulators.
 
#9 ·
Nothing fishy at all. It's just the market responding to news. Many years ago, I used to work in the old Toronto Stock Exchange, at 234 Bay St. in Toronto. I'd often see stocks that were like a yo-yo, changing with stupid little things. If people think the stock will be worth more, they will buy and sell if they think it will be less, regardless of whether that has any basis in reality. In this case, they heard about a possible sale, so they bought, expecting Rogers to pay more per share than what they had paid.
 
#8 ·
Nothing fishy here. If the deal went through, CCA shares would be worth $134.22. Some people were trading without doing their homework and knowing the Audet family could veto the deal. The family has always said they aren't interested in selling. If the deal doesn't go through, the shares are worth about the same as before. Right now, they're somewhere in between, with a possible deal on the table.

Altice said they presented an offer to Cogeco. Their goal in making the offer public wasn't to manipulate the stock price, but to have regular shareholders pressure the family to vote in favour of the sale.
 
#11 ·
interesting that the part about the Audet family having no interest 'at this time' in selling was WELL BEHIND the news that a sale was imminent.
Judging from the tone of Cogeco's press release, they did have discussions with Altice and made their rejection clear. They weren't aware that Altice would issue the press release, so it took a couple of hours to arrange an emergency meeting of the Boards of Directors and hammer out a press release.

Here are 2 new press releases. The independent members of the boards are those not directly associated with the family.

Cogeco's Boards of Directors announced that the independent members have rejected an unsolicited, non-binding proposal from Altice USA, Inc. of New York and Rogers Communications Inc. of Toronto. The rejection followed meetings of both Boards held earlier today and discussions with members of the Audet family to review the unsolicited proposal. (Press Release)

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“Members of the Audet family unanimously reiterated that they are not interested in selling their shares. The family takes pride in its stewardship role in both companies, offering high-quality services to its customers, enriching the communities in which they operate and creating superior returns for shareholders through sound growth strategies,” stated Louis Audet, president of Gestion Audem Inc.

Gestion Audem is a company that is controlled by the members of the Audet family and holds 69% of all voting rights of Cogeco Inc., which in turn controls 82.9% of all voting rights of Cogeco Communications Inc. (Press Release)
 
#13 ·
Altice and Rogers provide statement on Cogeco’s response to acquisition offer

“We strongly believe that we presented a very attractive offer — one that would reward all Cogeco shareholders with a significant premium – and we stand by that offer. We remain committed to pursuing this transaction and are open to engaging with shareholders and the boards in a constructive dialogue.”

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In case people are wondering why Altice is aggressively pursuing this deal, Atlantic Broadband accounts for about 40% of Cogeco's revenue and is the eighth-largest cable provider in the U.S.
 
#14 ·
During the process, the Quebec Premier appeared ready to intervene to prevent the head office from leaving Quebec. Rogers issued another press release today:

Rogers commits to expanding its already strong Quebec presence

Following this week’s announcement related to the proposal to acquire Cogeco’s Canadian assets, Rogers Communications today reaffirmed its commitment to expand and grow its presence in Quebec.

Upon successful completion of a Cogeco transaction, Rogers would ensure that Cogeco’s headquarters and management team remain in the province, including the operations of the company’s Quebec based media assets....
 
#15 ·
As the designated representative of the Audet family, Louis Audet issued a press release yesterday which included the following:
I want to provide absolute clarity for stakeholders regarding our intentions in response to the recent unsolicited proposal to acquire Cogeco. Our shares are not for sale. And let me be clear, our refusal is not a negotiating position, it is definitive.
 
#17 ·
In case you missed it: I posted a couple of times last week that the Audet family controls Cogeco through multiple voting shares, which is why I didn't repeat that part of the last press release. I posted Rogers holdings of subordinate voting shares in post 1.

Multiple voting shares are common the cable industry, which means the founding family members also control Rogers and Shaw. Conversely, Telcos like Bell and Telus have single voting shares and are owned by the general public, so it's "one share, one vote". When Bell offered a 23% premium to purchase MTS, the shareholders voted based on their individual ownership.
 
#18 ·
More back and forth: Altice and Rogers sent a letter to Cogeco's boards accusing them of various "failures" in not following the appropriate process before rejecting the offer, and requested a meeting this week.

Cogeco's lead director responded "We will not engage in a futile exercise..." and clearly stated that the family's shares were not for sale. He also said the other parties "engaged in bad faith tactics, some of which created confusion in the market."
 
#20 ·
Altice announced a higher offer today. It also said "If Altice USA is unable to arrive at a mutually satisfactory agreement by November 18, 2020, or, at the very least, it does not see a clear path forward to completion of a transaction, this revised offer will be withdrawn."

The offer was immediately reject by the Audet family, with some very colourful language - excerpts below.

Gestion Audem Rejects Second Unsolicited Proposal From Rogers and Altice

"As we did on September 2nd, 2020, following the announcement of their first unsolicited proposal, members of the Audet family unanimously reject this further proposal. Since this is apparently not registering with Rogers and Altice, we repeat today that this is not a negotiating strategy, but a definitive refusal. We are not interested in selling our shares," said Louis Audet, President of Gestion Audem.

"Rogers has freely chosen to accumulate shares in the Corporations with full knowledge of the implications. The Audet family regrets that Rogers' capital allocation decision is causing the Rogers family and Board such anguish," said Louis Audet, President of Gestion Audem.
 
#21 ·
But what if they (Altice and Rogers) make an offer the shareholders can't refuse? Cogeco is a bit of a lackluster cable company but I'm not sure if less competition is the answer. Part of me would like to have access to the Rogers Ignite service to better compete with Fibe. Cogeco always has something coming but never quite gets there in time.

-Mike
 
#22 ·
Following deliberations of the independent board members supported by independent legal counsel, taking into account the stated position of the Audet family, the boards of Cogeco Inc. and Cogeco Communications Inc. rejected the revised unsolicited, non-binding proposal and will not engage with Altice and Rogers. (Press Release)
 
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