Altice USA’s and Rogers Communications’ unsolicited offer for Cogeco reached a new level Wednesday after Cogeco's lead independent director fired off a letter to the companies, claiming they are confusing investors by continuing to pursue the bid.
Altice USA and Rogers launched a $7.8 billion offer for Cogeco on Sept. 2. As part of that offer, Altice USA would purchase Cogeco’s U.S. assets -- Atlantic Broadband -- for about $3.6 billion, while Rogers would acquire the company’s Canadian businesses for $4.2 billion. Cogeco’s controlling shareholder -- the Audet family -- promptly rejected the deal, stating that its refusal to sell was not a negotiating tactic.
While Altice USA and Rogers have said they are hopeful a deal could be reached, Cogeco has been adamant in its rejection of the deal.
Altice USA and Rogers fired off a letter to Cogeco’s executive chairman and lead representative of the Audet family Louis Audet on Sept. 15, pointing out that its offer was rejected without the directors or independent directors “undertaking any appropriate process.”
Altice USA and Rogers continued that no independent committee was created to look at the offer, nor was the offer referred to Cogeco’s Strategic Opportunities Committee.
“These failures of the boards resulted in there being no comprehensive review and analysis of our offer or deep engagement with the controlling shareholder,” Goei and Natale wrote. “In simple terms, the boards and their independent directors failed to fulfill their most basic duties in representing the shareholders they are duty bound to represent and protect.”
Goei and Natale asked to meet with Cogeco lead independent director James Cherry later this week to “to better understand the rationale of the boards and independent directors behaving in this manner.” They asked to hear from the board by 5 p.m. Sept. 16 as to whether such a meeting was possible.
Cherry met that deadline, stating in a letter Wednesday that the allegations made by Altice USA and Rogers were untrue and unsubstantiated.
“From the outset, you have engaged in bad faith tactics, some of which created confusion in the market,” Cherry wrote, adding that shortly after making its initial offer to Cogeco on Sept. 1 and offering to respond to questions, Altice and Rogers made their bid public. That action, Cherry continued, didn’t give Cogeco any time to respond and neglected to mention that the Audets had rejected the proposal the night before.
“We can only surmise that this was done with a view to misleading investors and increasing the stock price in an attempt to put pressure on the family to sell,” Cherry wrote, adding that its process was proper. “We will not engage in a futile exercise aimed at diverting the attention of management and key resources from our business operations while creating friction among our stakeholders.”
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Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.