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Altice USA Inc. and Rogers Communications Inc. are teaming up to acquire Cogeco Inc. and Cogeco Communications Inc. with an unsolicited $10.3-billion offer, but the move faces stiff opposition from the companies’ controlling shareholder and Quebec Premier François Legault.

Under the proposal, Altice, a major U.S. cable company, would snap up Cogeco’s U.S. assets – an East Coast cable business called Atlantic Broadband – while Rogers, a long-time shareholder of Cogeco, would acquire the Canadian side of the business for $4.9-billion.

However, the deal does not have the support of Gestion Audem Inc., a company controlled by the members of the Audet family that holds 69 per cent of the voting rights at Cogeco.

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The family, which also controls 82 per cent of the votes at Cogeco Communications, has unanimously rejected the offer, Gestion Audem said in a statement. “The family takes pride in its stewardship role in both companies,” the statement read.

The boards of both Cogeco companies have also rejected the offer, although analysts say other bids are likely to follow.

Altice approached Toronto-based Rogers to initiate the bid for Cogeco, according to a source. The Globe and Mail is not identifying the person because they are not authorized to speak publicly about the matter.

The family’s refusal to sell its multiple-voting shares comes in spite of Altice offering what it calls a “sizable premium” in order to entice them. Altice is offering the Audet family $800-million for their holdings, while other shareholders would receive $106.53 per Cogeco share and $134.22 per Cogeco Communications share.

“We are pleased to present this very attractive offer for Cogeco, and are confident that executive chairman Louis Audet and the Cogeco boards will act in the best interest of all shareholders and fairly evaluate this offer,” Dexter Goei, chief executive officer of Altice USA, said in a statement.

Mr. Legault, meanwhile, vowed to not to let Montreal-based Cogeco fall into the hands of non-Quebec owners, setting up a potential intervention by the province’s Investissement Québec investing arm.

“There’s no way [we’ll let] this Quebec company move its headquarters to Ontario,” Mr. Legault said Wednesday during a prescheduled interview on Quebec City Cogeco station FM93. “We’ll do everything we can to keep the head office here. It’s out of the question that we lose a head office as important as Cogeco.”

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Pension fund Caisse de dépôt et placement du Québec, which owns 21 per cent of Atlantic Broadband, could also become involved, like it did in helping Quebecor buy cable operator Vidéotron and thwart a takeover attempt by Rogers in 2000. Caisse spokesman Maxime Chagnon declined to comment but said the pension giant is following the situation “very closely.”

The Premier said government officials had spoken Wednesday with Mr. Audet to assess the situation. He described the dynamic taking place inside Cogeco as one pitting two large shareholders – the Audet family and Rogers – against each other.

Analysts said that while the takeover bid is fair from a financial point of view, the Audet family’s reluctance to sell may force the bidders to increase their offer.

“This may just prove to be round one,” National Bank analyst Adam Shine said in a note to clients, noting that further discussions around pricing and structure are likely to ensue. “Of course, it’s entirely possible that the Audet family simply opts not to be a seller at this time,” he added.

Rogers has long been thought to be interested in acquiring Cogeco’s Canadian cable operations, which are in Quebec and Ontario, some near Rogers’s Ontario cable operations. Cogeco, however, has always maintained that it is a “buyer and a builder but not a seller,” Bank of Montreal analyst Tim Casey said in a note to clients.

“By going hostile and public, Altice/Rogers are clearly trying to force the issue,” Mr. Casey said, adding that Rogers may end up selling its stake in Cogeco if an agreement can’t be reached.

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Shares of Cogeco Inc. rose 17 per cent on Wednesday, closing at $92.19, while Cogeco Communications Inc. closed 15 per cent higher at $114.27.

Cogeco was started in 1957 by Henri Audet, an engineer who sold his house and raised $100,000 from friends and investors to launch a television station in Trois-Riviéres. Over the years, Mr. Audet built Cogeco into a major player in the cable and media industries. His son Louis Audet joined Cogeco in 1981 and served as CEO for 25 years before becoming executive chairman.

In 2012, Cogeco expanded into the United States by acquiring cable operator Atlantic Broadband for US$1.36-billion. The subsidiary is now the ninth-largest cable operator in the U.S. and provides internet, video and telephone services. Acquiring Atlantic Broadband would expand Altice’s customer base by more than 1.1 million homes and businesses.

More recently, Cogeco has found itself at the centre of a high-profile proceeding on the state of Canada’s wireless industry. The Canadian Radio-television and Telecommunications Commission is mulling whether Canada’s large national carriers should be required to open up their wireless networks to resellers, known in the industry as mobile virtual network operators or MVNOs. The national carriers strongly oppose such a policy, saying it would hamper network investments.

Cogeco, which has expressed interest in offering mobile phone services to its Canadian cable customers, has proposed a hybrid model, which would only give companies willing to invest in infrastructure access to national wireless networks. Such a model could end up being a compromise solution, Mr. Shine at National Bank said.

Rogers currently owns 33 per cent of the subordinate voting shares at Cogeco Communications and 41 per cent of the subordinate shares at Cogeco. Acquiring Cogeco’s Canadian operations would expand its footprint by 1.8 million homes and businesses.

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With a report from Andrew Willis

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