Shoppers walk outside the internet, television, home phone provider, Cogeco location in LimeRidge Mall in Hamilton on Sept. 2, 2020.The Globe and Mail
Rogers Communications Inc. is vowing to keep Cogeco’s headquarters in Quebec if it is successful in acquiring its Canadian operations, after Quebec Premier François Legault said he wouldn’t allow the company to relocate to Ontario.
Rogers and New York-based cable company Altice USA Inc. went public on Wednesday with an unsolicited $10.3-billion offer to buy Cogeco Inc. and Cogeco Communications Inc. The proposed deal would see Altice snap up Cogeco’s U.S. network, Atlantic Broadband, while Rogers would acquire Cogeco’s Canadian arm, a unit with 1.8 million subscribers, for $4.9-billion.
The offer was promptly turned down by the Audet family, which controls the Montreal-based business, and independent directors at the two companies.
It also drew opposition from Mr. Legault, who said that losing a head office as important as Cogeco’s is “out of the question.”
“There’s no way [we’ll let] this Quebec company move its headquarters to Ontario,” Mr. Legault said during an interview Wednesday on Quebec City Cogeco station FM93.
In a statement issued Friday, Rogers said it is committed to expanding its presence in Quebec and would keep the Cogeco headquarters and management team in the province if it succeeds in its takeover attempt. Rogers currently has 3,000 employees in Quebec, including at its Montreal-based mobile carrier Fido, which it acquired in 2004.
“Rogers and Fido have deep roots across Quebec and we want to build on them,” Rogers president and chief executive officer Joe Natale said in a statement. The company pointed to its acquisition of Fido 16 years ago, which saw the mobile carrier remain headquartered in Montreal, as evidence of its commitment to the province.
A spokesperson for the Quebec Premier reiterated on Friday the importance of Cogeco’s head office for the province and said discussions between the government and Cogeco’s executive chairman Louis Audet are ongoing.
“Mr. Audet was clear in his intentions this week,” Ewan Sauves said in an e-mail.
Some business executives and observers based in Quebec say there was a certain naiveté in the way the offer by Altice and Rogers failed to address Quebec’s long-standing sensitivity to the prospect of losing its home-grown companies. The suitors should have moved forward more diplomatically and laid more groundwork to win support for their approach, they say.
“This was an offer whose aim was to get the Audet family to the negotiating table. But for it to be well-received, they could have added a bit of sugar to it. And that’s not what happened,” said Louis Hébert, a mergers and acquisitions specialist at Montreal’s HEC business school. “They’re in a bit of damage control now.”
Rogers had to make this commitment to the province, not only to salvage the bid but also to protect its own long-term reputation and standing in the province, Mr. Hébert said. “They have to make sure they don’t antagonize their existing mobile clients and other people who are already on their side.”
Under the proposed deal, the Audet family would receive $800-million for their multiple voting shares of Cogeco Inc., which, according to the company’s annual report, have a book value of $12-million.
Public shareholders would receive $106.53 per share of Cogeco Inc. and $134.22 per share of Cogeco Communications Inc. – a 30-per-cent premium to where the two stocks were trading prior to the offer being made public.
Rogers director Robert Dépatie, who once headed up communications company Quebecor Inc., said the takeover would provide long-term benefits to the province.
“This is an opportunity to leverage the full weight of Rogers to make even more meaningful, long-term investments to benefit Quebec now and into the future,” Mr. Dépatie said in a statement.
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