Altice USA and Rogers Communications have teamed up on a complex deal that aims to divvy up Cogeco's US and Canadian cable operations and drive more consolidation in the broader North American cable market.
At a high level, Altice USA made a $7.8 billion all-cash offer to acquire all outstanding shares of Cogeco. Then the deal gets a bit trickier. Altice USA intends to hold onto Cogeco's US assets (namely Atlantic Broadband) and then sell Cogeco's Canadian assets to Toronto-based Rogers.
Montreal-based Cogeco acquired Atlantic Broadband in 2012.
Quincy, Massachusetts-based Atlantic Broadband, a top ten US cable operator, offers service in parts of 11 states: Connecticut, Delaware, Florida, Maine, Maryland, New Hampshire, New York, Pennsylvania, South Carolina, Virginia and West Virginia.
Altice USA reasoned that the deal would add more scale to its business and complement its current footprint – parts of New York, Connecticut and New Jersey (the former Cablevision Systems areas now being operated under the "Optimum" brand), and Suddenlink's systems in more rural parts of the US.
Under the full financial terms, Altice USA said it would pay C$10.3 billion (US$7.8 billion) for all outstanding shares of Cogeco Inc. and Cogeco Communications, including about C$4.8 billion (US$3.6 billion) to be paid by Altice USA for Cogeco's US assets.
Rogers, the largest long-term shareholder of Cogeco, currently owns 41% of the outstanding Cogeco Inc. subordinate voting shares and 33% of outstanding Cogeco Communications subordinate voting shares.
Altice USA, which recently acquired Service Electric Cable TV of New Jersey, said it expects to wrap up the deal within six to nine months after signing the definitive agreements.
Update: Altice USA has more convincing to do. Cogeco announced today that it has received the non-binding proposal and that it will be submit it to its board for review. However, it added that Gestion Audem Inc., the company controlled by members of the Audet family, "has already indicated that it does not intend to sell its shares and will not support the proposal."
For more about the complexities of this proposed deal and how it might fit into other cable industry-related M&A scuttlebutt, please see this story at Light Reading: Altice USA makes play for Atlantic Broadband.
— Jeff Baumgartner, Senior Editor, Light Reading, special to Broadband World News