The chief executive of Altice USA Inc. says there is a “low chance” that its $11.1-billion hostile takeover bid – alongside Rogers Communications Inc. – for Quebec-based cable operator Cogeco will succeed.
Dexter Goei, CEO of New-York-based Altice said Thursday that the cable operator is “very cognizant” of the fact that the deal cannot move forward without the support of the Audet family, which controls Cogeco Inc. and subsidiary Cogeco Communications Inc. through multiple voting shares.
Cogeco executive chairman Louis Audet has repeatedly turned down the offer, which would see Rogers acquire Cogeco’s Canadian operations while Altice would purchase the U.S. cable business, Atlantic Broadband.
Based on Mr. Audet’s comments, “I think it’s fair to say that there’s a low chance of us being able to … move forward on this project," Mr. Goei said during a conference call to discuss Altice’s third-quarter results.
"Formally, we’ve got until Nov. 18 to see if anything shakes loose.”
Altice, the fourth-largest cable company in the U.S., has previously said it will walk away from the offer if it sees no path forward by that date.
Cogeco declined to comment on Mr. Goei’s statements, while Rogers was not available to comment.
Rogers has vowed to invest $3-billion in Quebec and keep Cogeco’s headquarters in Montreal if the acquisition moves forward. The suitors have also sweetened their offer, from $10.3-billion initially to $11.1-billion – a premium of 51 per cent from the stock price before the first bid in September.
The revised offer would pay Cogeco shareholders $123 per share, while shareholders of the more widely held Cogeco Communications would receive $150 per share. That’s up from the opening offer of $106.53 per Cogeco share and $134.22 per share of Cogeco Communications.
The Audets, who own 69 per cent of the voting rights at Cogeco but just 3.3 per cent of the equity, were quick to reject the sweetened bid, reiterating that the family’s shares are not for sale.
Analysts had previously speculated that an even higher offer could be coming, but would be unlikely to succeed. “It would appear that Cogeco just isn’t for sale,” National Bank Financial analyst Adam Shine said in a note to clients earlier this month.
Rogers is Cogeco’s largest shareholder, owning about a third of the equity in both companies. The proposed acquisition would see Rogers pay a net price of $3.7-billion and expand its footprint by 1.8 million homes and businesses. If the bid fails, analysts say Toronto-based Rogers will likely sell its Cogeco shares, which are worth approximately $1.7-billion.
In 2012, Cogeco expanded into the United States in 2012 with a US$1.36-billion acquisition of Atlantic Broadband. The subsidiary is now the ninth-largest cable operator in the U.S. and offers internet, video and telephone services. The acquisition would expand Altice’s customer base by more than 1.1 million homes and businesses.
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