Altice USA, Rogers Communications and Cogeco swapped letters with each other in recent days, and none of them were full of love.

In response to a letter sent Tuesday by Altice USA and Rogers indicating concerns that an unsolicited offer of $7.8 billion to acquire Cogeco was not being properly vetted, James Cherry, the lead director for the boards of Cogeco Inc. and Cogeco Communications, issued one of his own to Rogers President and CEO Joe Natale and Altice USA CEO Dexter Goei, indicating that the two boards met Wednesday and once again rejected the offer to acquire the Montreal-based company.

Cogeco's board stance aligns with Gestion Audem, a company controlled by members of the Audet family that holds 69% voting rights in Cogeco. Gestion Audem has also rejected the offer and has been clear it has no interest in negotiating.

Like the ownership and voting structure of Cogeco, the bid is also somewhat complicated. Altice USA wants to acquire Cogeco and retain Cogeco's US assets (Atlantic Broadband) and then sell Cogeco's Canadian assets to Toronto-based Rogers, which currently holds a 33% equity stake in Cogeco and is Cogeco's largest long-term shareholder.

Lack-of-love letters
The contents of the letters show how cantankerous this situation has become.

In their letter to Louis Audet (who represents the Audet family on behalf of Gestion Audem) on Tuesday (September 15), Altice USA and Rogers argued that the offer was rashly rejected – within a day of the offer being submitted – without a proper review process with common equity shareholders of Cogeco.

While Gestion Audem is within its rights to rebuff the bid, Rogers and Altice USA believe more time is needed for the Cogeco boards to conduct a more comprehensive review and analysis of the offer, and that the two boards failed to "establish independent committees that were properly advised."

"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," the letter to Audet continued. "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."

To facilitate a dialogue, Altice USA and Rogers pressed for a meeting with Cherry, lead director for the boards of Cogeco Inc. and Cogeco Communications, "to better understand the rationale of the boards and independent directors behaving in this manner."

'Bad faith tactics'
In a responding letter sent on behalf of the Cogeco boards, Cherry accused Altice USA and Rogers of engaging "in bad faith tactics, some of which created confusion in the market," noting that independent members of both boards met on September 2 to discuss the proposal. Prior to that, Audet met with independent directors as a representative of the Audet family to indicate that their shares were not for sale and that "their position was not a negotiating tactic," Cherry explained.

As for that bad faith tactics claim, Cherry noted that the announcement of the unsolicited offer was made public the morning of September 1 – the day after it was first proposed privately – depriving Cogeco the opportunity to respond.

Cherry said Cogeco was also taken aback by the public announcement because it acknowledged that support of the Audet family was necessary to complete the deal – yet the same announcement did not directly disclose that the Audet family had rejected the deal the prior evening.

"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. He added that Cogeco is "fully confident our process was proper" and given "the due care and attention that it deserves."

Cherry then proceeds to shut the door: "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."

Sticking around
Altice USA and Rogers don't plan to go away. "We remain committed to pursuing this transaction and are open to engaging with shareholders and the boards in a constructive manner," they said in a joint statement issued Wednesday.

Adding to the drama, Cogeco SVP and CFO Patrice Ouimet told an investor conference this week that the hostile bid appears to be driven in part by Rogers' desire to keep Cogeco out of the Canadian mobile market. Speaking at a separate investors event on Tuesday, Goei said he's received "very positive feedback" from Cogeco shareholders about the unsolicited bid.

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— Jeff Baumgartner, Senior Editor, Light Reading