Dexter Goei has built a cable empire by cutting deals with families that, at least initially, seemed uninterested in doing business. Don’t underestimate the Altice USA chief executive officer’s ability to win over the Quebec clan that controls Cogeco Inc.
Mr. Goei, backed by Altice’s French billionaire founder Patrick Drahi, shook up the clubby world of Canadian telecommunications on Tuesday by making an “unsolicited” – meaning hostile – $10.3-billion offer for Cogeco, which is controlled by executive chairman Louis Audet and his family.
If the bid is successful, Altice would grab Cogeco’s U.S. cable business, Atlantic Broadband, and in turn sell the Canadian operations to long-time Cogeco shareholder Rogers Communications Inc., which would finally get its hands on a Canadian network with 1.8 million subscribers. The Audet family would walk away with $800-million, in cash.
Just a few hours after Altice made its offer public, Cogeco shot it down, saying in a press release Tuesday morning that the Audet family “has already indicated that it does not intend to sell its shares and will not support the proposal.”
Now Mr. Goei, a former Morgan Stanley investment banker, must launch a charm offensive.
California-born, the 49-year-old has lived in Paris and speaks French, which matters when doing business in Quebec. His relationship with Mr. Audet dates back more than two decades, to Mr. Goei’s stint running the telecom team at Morgan Stanley.
Mr. Goei used to drop by Cogeco’s head office to chat about options for a troubled cable division in Portugal. After six money-losing years, Cogeco exited Portugal in 2012, writing off more than $600-million. Mr. Audet sold the business to Altice.
In U.S. business circles, Mr. Goei and Mr. Drahi are best known as the executives who talked New York’s Dolan family into parting with Cablevision Systems and its 4.6 million subscribers for US$17.7-billion in 2016. The Dolan clan, like the Audets, were founders who controlled Cablevision through a dual share structure.
Media reports on the Cablevision sale say Mr. Goei pitched a story that cable’s best days were behind it, and the Dolans were better off selling, rather than effectively remortgaging the company to invest in the technology needed to keep pace with larger rivals. The family took the money, allowing scion James Dolan to turn his full attention to his ownership of the National Basketball Association’s New York Knicks.
Mr. Audet, 68, should be justifiably proud of what his family has achieved at Cogeco. However, a guy with a Harvard MBA is going to understand the concept that his company’s past looks better than its future. Cogeco’s growth opportunities are limited in Canada’s mature telecom market, where competitors have far deeper pockets.
To expand Cogeco’s U.S. beachhead – Atlantic Broadband – Mr. Audet would have to make bet-the-company-sized acquisitions. Again, the Montreal company will routinely be going up against far larger rivals, including Altice.
Another Quebec cable entrepreneur, André Chagnon, faced a similar scenario 20 years ago and decided to sell his company, Groupe Vidéotron Ltée. Mr. Chagnon and his family then put their energy into doing good deeds by establishing a $1.4-billion foundation.
Would the same philanthropic future appeal to the Audet clan? You would think so. Photos of Mr. Audet frequently show an Order of Canada pin on his lapel. The cable executive earned the honour as both an entrepreneur and generous supporter of Montreal charities, including the school where he earned an engineering degree, École Polytechnique.
The pitch from Mr. Goei and the two Rogers board members who are part of Quebec’s business elite – former Quebecor CEO Robert Dépatie and Transcontinental chair Isabelle Marcoux – will be simple: Think of the difference you could make in your community with $800-million in your wallet.
To sugarcoat their hostile bid, Mr. Goei and Rogers head Joe Natale – another CEO well versed in dealing with families – went out of their way on Tuesday to praise the achievements of the folks they want to move to the sidelines. “We greatly respect and appreciate the legacy the Audet family has created with Cogeco,” Mr. Goei said, conveniently overlooking that the family is still hard at work building that legacy.
The line from Mr. Natale struck much the same tone: “This meaningful offer reflects the tremendous accomplishments of the Audet family.”
Now, we’ll see if this proven pair of negotiators can persuade another patriarch to sell the family business.
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Andrew Willis