The boards of Cogeco Inc. and subsidiary Cogeco Communications Inc. have rejected a sweetened takeover bid worth $11.1-billion from Rogers Communications Inc. and New York-based cable company Altice USA Inc.
Toronto-based Rogers and Altice raised their unsolicited offer for the Cogeco companies by $800-million on Sunday and set a deadline of Nov. 18, saying the bid will expire if they don’t see a path forward by then. The new proposal amounts to a premium of 51 per cent from the stock price before the first bid in September.
The Audet family, which controls the Cogeco companies through a dual share structure, was quick to shoot down the new offer, reiterating that its shares are not for sale.
The target cable companies said Tuesday that their boards of directors met earlier in the day to consider the proposal. They also heard from Cogeco executive chairman Louis Audet, who reiterated the family’s position.
“Following separate deliberations of the independent board members supported by independent legal counsel, taking into account the stated position of the Audet family, the boards rejected the revised unsolicited, non-binding proposal and will not engage with Altice and Rogers,” the target companies said in a news release Tuesday.
The proposed deal would see Altice, the fourth-largest cable company south of the border, acquire Cogeco’s U.S. assets, ninth-ranked Atlantic Broadband, for $5.1-billion. Rogers, which already has a significant investment in Cogeco, would snap up the Canadian business for a net price of $3.7-billion.
Rogers has vowed to ramp up investment in its Quebec operations if the takeover succeeds. “We believe this is a compelling offer that would reward all shareholders, and should the Cogeco boards and Audet family wish to meaningfully engage with subordinate shareholders about the offer, it remains in effect until Nov. 18, 2020,” Rogers and Altice said in a joint statement Tuesday.
Under the revised offer, Cogeco shareholders would receive $123 a share, up from $106.53 in the first bid, which was tabled in early September and rejected by both the Audets and the companies' directors. Shareholders of Cogeco Communications, the more widely held stock, would get $150 a share, versus $134.22 in the opening bid.
The deal cannot go forward without the family’s support. The Audets own 69 per cent of the the voting rights in Cogeco, even though they hold just 3.3 per cent of the equity.
On Monday, Cogeco shareholder Julian Klymochko urged the Audet family to give other investors a say on the proposal, saying that rejecting the new bid is a lost opportunity. Mr. Klymochko is the chief executive officer of Accelerate Financial Technologies, which owns an undisclosed number of shares in the Cogeco companies.
Analysts, meanwhile, speculated that the suitors could make an even higher offer, but noted that it would be unlikely to succeed. “It would appear that Cogeco just isn’t for sale,” National Bank Financial analyst Adam Shine said Sunday in a note to clients.
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