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Altice USA raises offer for Cogeco companies to C$11.1B

  • Altice USA (NYSE:ATUS) has presented a revised offer to acquire Cogeco (OTC:CGECF) and Cogeco Communications (OTCPK:CGEAF), now up to C$11.1B (about $8.4B).
  • Its previous C$10.3B offer - a deal to buy Cogeco for its U.S. assets (namely Atlantic Broadband), and sell the Canadian assets to Rogers Communications (NYSE:RCI) - was rejected by Cogeco's controlling Audet family.
  • The particulars of the new deal include not only the C$11.1B for the assets of both Cogeco companies, but C$5.1B (about $3.9B) to be paid by Altice USA for the American assets.
  • Altice USA notes that given the need for support from the Audet family, there's a "sizable premium" on those shares - specifically, C$900M for their ownership interests. And it also includes C$123/share for the remaining Cogeco subordinate voting shares, and C$150/share for the remaining Cogeco Communications subordinate voting shares.
  • Altice USA says if it's unable to arrive at a mutually satisfactory agreement by Nov. 18, or if it doesn't see a clear path forward to competing a transaction, the offer will be withdrawn.

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autofocus111 profile picture
Well that's that I guess. Fight fire with cash. There goes all the cash CCA had on their balance sheet.

>>>MONTREAL, Oct. 21, 2020 /CNW Telbec/ - Cogeco Communications Inc. (TSX: CCA) announced today that following the satisfactory completion of the due diligence process, its Canadian subsidiary Cogeco Connexion has entered into a definitive agreement to purchase DERYtelecom, the third largest cable provider in the province of Quebec for $405 million. DERYtelecom is based in Saguenay, Quebec and offers Internet, television and telephony services to approximately 100,000 customers in over 200 municipalities across several regions in Quebec, including Estrie, Lanaudière, Montérégie and the Laurentians. Revenue and adjusted EBITDA for the fiscal year ended August 31, 2020 are estimated to be $105 million and $44 million, respectively.

autofocus111 profile picture
What was RCI thinking back in 2009? They must have known how difficult it was going to be to ever seize Cogeco from the Audets. And if they can't get control of Cogeco's Canadian assets, what will their thinking be now that the Audets have shut down any prospect of selling out to RCI? Will institutional holders of Cogeco once again look to dump their holdings in the firm?

>>>A handful of institutional investors - four or five - decided there are better places to invest their capital than Cogeco Cable, a stock that's returned a respectable 19 per cent over the past 12 months. These institutions were sellers of Cogeco Cable and parent Cogeco, and a dealer was able to find a buyer for a massive block in Rogers. With this purchase, Rogers moves back to owning 29.8 per cent of Cogeco Cable's subordinate voting shares and 20.2 of the equity. Rogers also announced that it bought 1.6 million subordinated shares of parent Cogeco, and now holds 33.6 per cent of the parent company's subordinate shares and approximately 29.9 per cent of the equity. It's worth noting that Rogers was able to buy at substantially below the price that Cogeco Cable commanded when it sold stock back in 2007

autofocus111 profile picture
That's a ~50% premium to where CCA and CGO were trading before the initial offer back in early Sept. The controlling Audet family is going to have a very difficult time explaining to minority shareholders how they plan to independently achieve these valuation levels.
@autofocus111 luckily controlling voting rights means thry dont need a plausible explanation. They are free to spout about long term values etc.
autofocus111 profile picture
dlitten True, but if shareholders are unconvinced by their story and bail out en masse, the market value of the companies (and that includes the Audets' controlling interest) will fall. Why would any company owner want that, unless they are convinced that the true value of the firm will eventually again be reflected in the stock price. Do the Audets really believe the fair value of the company is/will be as high (or higher) than the current offer on the table?
@autofocus111 unclear. Hope u r right. Fear they are like TDS controlling family who just seems to love being in charge more than being richer.
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