The Quebec government and the province’s fund manager gave Cogeco Inc. and its controlling shareholder, the Audet family, a vote of confidence on Tuesday in the face of a hostile takeover offer.
In the latest sign that politics will play a role in the $10.3-billion bid for Montreal-based Cogeco and subsidiary Cogeco Communications Inc. from Toronto-based Rogers Communications Inc. and Altice USA Inc., a New York-based cable company, Quebec Minister of Economy and Innovation Pierre Fitzgibbon praised Cogeco executive chairman Louis Audet for pushing to “keep the decision-making centre of the company in Quebec.”
In a motion supported by all of the province’s political parties, Mr. Fitzgibbon said the government “recognized that Cogeco plays an important role in the media and telecommunications world in Quebec." He also said the province "recognizes the importance of maintaining Cogeco’s head office in Quebec.”
Rogers promised earlier this month to preserve head-office jobs in the province if the takeover was successful, and speed up introduction of telecom infrastructure such as 5G networks, which the company launched in Montreal in January. Rogers has 3,000 employees, a head office for its Fido mobile-phone division and nearly two million customers in Quebec.
“We have great respect for the contribution of Henri Audet, a builder of Quebec, and recognize all the work accomplished by the Audet family, in particular Louis Audet, over the past many years," said Edith Cloutier, president of Quebec, Rogers Communications, in an e-mail on Tuesday. She said: “The Rogers 5G network, the largest in the country, will not only be a game-changer for growth and productivity across the province, but has the potential to enable Quebec to be a world leader in the knowledge economy for generations to come.”
Separately, the Caisse de dépôt et placement du Québec (CDPQ) said it supported Cogeco’s leadership and the company’s plans to expand its Canadian and U.S. networks. The $333-billion fund owns a 21-per-cent stake in Atlantic Broadband, Cogeco’s U.S. cable business.
Altice, the fourth-largest U.S. cable company, is offering to acquire Atlantic Broadband, the ninth-ranked player in the sector, while Rogers would buy Cogeco’s Canadian networks in Ontario and Quebec.
CDPQ executive vice-president Ani Castonguay said in an interview the fund is “aligned with the Audet family” and backs their plans to build Atlantic Broadband with an acquisition-based growth strategy. CDPQ invested US$315-million in Atlantic Broadband in 2017 to help pay for the purchase of a rival U.S. cable company. The takeover bid from Altice and Rogers values the CDPQ stake at more than US$750-million.
In 2000, Rogers struck a friendly $6-billion takeover for Montreal-based Groupe Vidéotron Ltée., only to have the offer trumped by rival Quebecor Inc., backed by the CDPQ.
The Audet family controls Cogeco through a dual share structure in which the clan holds the majority of votes, while owning less than 5 per cent of the parent company’s stock. Altice and Rogers offered the Audet family $800-million for their voting shares, an offer that Mr. Audet promptly turned down early this month. At the time, Mr. Audet said: “Our shares are not for sale. And let me be clear, our refusal is not a negotiating position, it is definitive.”
Mayors in a number of cities where Cogeco provides cable and internet services, along with local jobs, are also speaking out in the company’s favour. Cogeco received a vote of confidence in recent weeks from politicians in Burlington and Oakville in Ontario, and Trois-Rivières, where the cable company was founded in 1957. Oakville Mayor Rob Burton said: “I welcome the news that the Audet family, who hold controlling shares of Cogeco and, indirectly, Cogeco Communications, are not selling their shares.”
As part of a campaign against the takeover that is being fought neighbourhood by neighbourhood, Cogeco Communications has announced $14.7-million of spending on high-speed internet projects in Ontario and Quebec over the past two weeks. The rollout is part of a $1-billion capital spending plan in Canada over the next four years.
Editor’s note: (Sept. 23, 2020) The date of the Rogers/Vidéotron Ltée transaction has been corrected in the online version of this story.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.