The boards of directors of Cogeco Inc. (TSX: CGO) and subsidiary Cogeco Communications Inc. (TSX: CCA) announced yesterday that they have rejected an unsolicited takeover bid from a combination of Altice USA, Inc. (NYSE: ATUS) and Rogers Communications Inc. (TSX:RCI.A and RCI.B, NYSE: RCI). The two MSOs earlier in the day revealed that Altice USA had offered approximately CAN$10.3 billion (US$7.8 billion) in cash for all shares of Cogeco and Cogeco Communications, including those Rogers already owns. Rogers would then have acquired the Canadian operations of CGO and CCA from Altice USA.
Neither bidder has indicated whether another offer is in the works. Had yesterday’s bid been successful, Altice USA would have taken control of Atlantic Broadband, the Cogeco operations in the U.S. Altice USA said it would have supplied approximately CAN$4.8 billion (US$3.6 billion) of the total bid for these assets.
The offer included one price for the multiple voting shares in Cogeco held by the Audet family, which controls all such shares as well as approximately 0.9% of total outstanding subordinate voting shares in Cogeco. Altice USA said it was prepared to pay CAN$800 million (US$612 million) for the Audets’ stake in the two companies. Altice USA would then pay C$106.53 per share for the remaining CGO subordinate voting shares and CAN$134.22 per share for each CCA subordinate voting share. The offer represented a premium of 30% to each stock’s 1-month volume weighted average price on the Toronto Stock Exchange in August.
Rogers owns 41% of the outstanding CGO subordinate voting shares and 33% of outstanding CCA subordinate voting shares, so the bid would have had clear sailing with the backing of the boards of the acquisition targets and the Audet family. Because Rogers would have the benefit of the cash Altice USA was prepared to pay for its shares, buying back the Canadian operations would have cost the company a net cash consideration of CAN$3.4 billion (US$2.6 billion).
Cogeco and Cogeco Communications didn’t offer an explanation for the rejection. “The rejection followed meetings of both Boards held earlier today and discussions with members of the Audet family to review the unsolicited proposal,” read a statement from the companies.
Cogeco Inc. is a holding corporation that operates in the communications and media sectors. In addition to Cogeco Communications, it operates Cogeco Media, a subsidiary that owns and operates 23 radio stations serving mainly the province of Québec, as well as Cogeco News, a news agency.
Cogeco Communications provides triple-play services to residential and business customers in Québec and Ontario, Canada, under the Cogeco Connexion name, and in the United States under the Atlantic Broadband brand in 11 states along the East Coast.