Altice USA has made a bid to acquire Canadian operator Cogeco, valuing the company at CAD 10.3 billion. The deal would give the company Atlantic Broadband, the ninth-largest cable company in the US, while Cogeco's Canadian assets would be sold to Rogers Communications, which is already a large shareholder in the company.
The bid offers a premium to Cogeco's controlling shareholders the Audet family, including Cogeco executive chairman Louis Audet, of CAD 800 million on their multiple-vote shares. Their acceptance of the offer is needed for the deal to go ahead. The other Cogeco and Cogeco Communications would receive a 30 percent premium on the average share price in the past month, with cash bids of CAD 106.53 and CAD 134.22 per share, respectively.
The cost to Altice for the US assets is estimated at CAD 4.8 billion (USD 3.6 billion). The gross price for the Canadian assets to be paid by Rogers is CAD 5.5 billion, less the premium on the shares currently held by Rogers of CAD 0.6 billion, less the current value of Rogers’ shares of CAD 1.5 billion, for a net cash consideration of CAD 3.4 billion.
Atlantic Broadband would add around 1.1 million premises passed to Altice's network in key markets along the East Coast of the US, taking Altice to around 10 million premises passed in total. Altice said both companies would benefit from the increased scale, and the takeover fits with its strategy of growing through bolt-on acquisitions.
Cogeco expanded to the US in 2012 with the takeover of Atlantic Broadband for USD 1.36 billion. It's gradually expanded the business, including the takeover of the Metrocast cable business in early 2018 for USD 1.4 billion. In 2019, the US business generated just over CAD 1 billion in revenues and CAD 466 million in adjusted EBITDA. At the end of May, the operator counted over 927,000 primary service units, of which over half were broadband subscribers.
The Canadian business is slightly larger, with CAD 1.3 billion in revenues and CAD 689 million in adjusted EBITDA in 2019. It counted 1.8 million PSUs in May, including over 800,000 internet subscribers. A takeover would allow Rogers to expand its network footprint into the Quebec and Ontario markets and almost double the size of its cable business.
