War of words between Cogeco and Rogers heats up

In a Wednesday afternoon press release, the board of directors for Cogeco Inc. accused the CEOs of both Rogers Communications Inc. and Altice USA Inc. of making "untrue statements and unsubstantiated allegations" against them, and "misleading investors and increasing the stock price in an attempt to put pressure on the family to sell." The Wednesday press release includes a letter from lead director of Cogeco's board of directors James Cherry to Rogers CEO Joe Natale and Altice CEO Dexter Goei in which Cherry writes: "From the outset, you have engaged in bad faith tactics, some of which created confusion in the market." On Sept. 2, Rogers publicly announced an offer to buy Cogeco's Canadian assets for $4.9 billion as part of a deal that would see Altice take over Cogeco's American holdings. But in a press release the same day, Cogeco said the deal “was pre-emptively announced" by Altice and Rogers, and that Gestion Audem Inc., the company controlled by the members of the Audet family, “has already indicated that it does not intend to sell its shares and will not support the proposal.” On Tuesday, according to a letter linked to in Cogeco's press release, Rogers and Altice sent a letter to former Cogeco CEO and current executive Louis Audet. In the letter, Rogers and Altice accuse the Cogeco board of directors of having "failed to fulfill their most basic duties in representing the shareholders they are duty bound to represent and protect." "We do not understand how you as a board member of Cogeco Inc. and Cogeco Communications Inc., with the responsibility to act in the interests of all of the stakeholders, could have behaved in this unacceptable manner," Natale and Goei wrote in the Tuesday letter, addressing Audet directly. In response, Cherry wrote back to Natale and Goei Wednesday, saying that Rogers and Altice jumped the gun in announcing the offer. "Your proposal of September 1, 2020 offered to respond to any questions we may have and concluded by stating that you looked forward to our response," Cherry wrote. "However, minutes before the open of markets the following morning, without any warning and thereby depriving us of an opportunity to respond, you publicly announced your proposal in which you said that the support of the Audet family was necessary to complete a transaction, yet you failed to disclose that they had rejected your proposal the prior evening." At an investors conference Tuesday, Cogeco CFO Patrice Ouimet speculated that Rogers’ offer for the company was an attempt to eliminate Cogeco's potential entry into Canada's wireless market. In a research note Wednesday, National Bank analyst Adam Shine wrote: “In summary, Altice and Rogers continue to want to engage with the Cogeco boards who they believe are not taking seriously enough their takeout proposal, while Cogeco, for its part, is confident that it followed proper procedures in reviewing the proposal and responding with its rejections.” Shine said the deal appears to be at a stalemate. “Perhaps there may still be more steps to watch in this drama, but a timeout may be warranted before these pen pals succumb to another level of acrimony,” Shine wrote. “Cogeco doesn't appear to be a seller and one wonders if Altice and Rogers will actually be able to find a way to change the mindset of the Audet family.” — Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija

War of words between Cogeco and Rogers heats up

News | September 16, 2020

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War of words between Cogeco and Rogers heats up

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