Altice USA to acquire Cogeco for $7.8B

Altice USA to acquire Cogeco, to sell Cogeco Canadian assets to Rogers

Altice USA (ATUS) announced that it has presented an offer to Cogeco, or CGO, and Cogeco Communications, or CCA, (CGEAF) to acquire 100% of the issued and outstanding shares of Cogeco.

COGECO sold and broken into pieces

Cogeco Inc. is a Canadian telecommunications and media company. The company operates Cogeco Communications Inc. which is structured into three strategic business units; Cogeco Connexion, Atlantic Broadband, and Cogeco Media.

Altice USA buys Cogeco and sells parts to Roger Comm.

Altice USA has also entered into an arrangement to sell all the Canadian assets of Cogeco to the largest long-term shareholder of Cogeco, Rogers Communications (RCI), if its transaction with Cogeco is completed.

Upon completion of the overall transaction, Altice USA would own all the U.S. assets of Cogeco, namely Atlantic Broadband.

The aggregate all-cash consideration offered for all of the outstanding shares of CGO and CCA, including those owned by Rogers, is approximately $7.8B.

This includes approximately $3.6B to be paid by Altice USA for the U.S. assets: All the multiple voting shares of CGO are held in a company controlled by Mr. Louis Audet, the Executive Chairman of Cogeco, and members of the Audet family.

Given the position of the controlling shareholder, its support is necessary to complete a transaction, and as such the Altice USA offer includes a sizeable premium on those shares.

Altice USA ends up with Atlantic Broadband

Specifically, the offer includes $612M to the Audet family for their ownership interests, which include 100% of the multiple voting shares of CGO, or CGO MVS, and approximately 0.9% of total outstanding CGO subordinate voting shares, or CGO SVS.

The offer also includes C$106.53 per share for the remaining CGO SVS and C$134.22 per share for each CCA subordinate voting share, or CCA SVS.

These offer prices represent a significant premium of 30% to each stock’s 1-month volume weighted average price, or VWAP, on the Toronto Stock Exchange (the offer prices also represent a 36% premium for CGO SVS and 37% premium for CCA SVS to the August 31 closing prices).

This offer is in line with Altice USA’s previously stated objective to opportunistically grow through value-accretive acquisitions.

The acquisition of Atlantic Broadband, if consummated, would allow Altice USA to build on its success with prior cable acquisitions in the United States and expand its operations across 11 states on the east coast of the United States, adjacent to its existing Optimum and Suddenlink footprints.

Altice USA’s share repurchase and net leverage targets for 2020 remain unchanged from this transaction.”

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

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