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Altice USA gives up on Cogeco

Altice USA confirmed that it has pulled the plug on what's been a contentious pursuit of Cogeco after the deadline on Altice USA's sweetened offer for the Canadian operator expired on Wednesday.

Altice USA's plan was to acquire Cogeco for C$11.1 billion ($8.4 billion), retain Cogeco's US assets (primarily Atlantic Broadband) and then sell Cogeco's Canadian assets to Toronto-based Rogers Communications. The Cogeco boards and a family-owned business with 69% of voting rights in Cogeco rejected Altice USA's and Rogers's overtures at every turn.

Cogeco has likewise cast itself as a buyer, not a seller, holding that there's some 30 to 40 companies on its target list. Cogeco recently snapped up DERYtelecom, a Quebec-based company with about 100,000 customers.

Altice USA CEO Dexter Goei had hoped he could entice Cogeco's boards and Gestion Audem (the entity owned by the Audet family with the majority voting shares) to get behind the offer, but ultimately came up short.

"Our offer to acquire Cogeco in order to own Atlantic Broadband has expired and we do not intend to extend it," Altice USA said in a statement. "We remain committed to our growth strategy and continue to focus on opportunities to drive value for our shareholders."

Speaking on the company's Q3 2020 call last month, Goei said Altice USA was looking at a "handful" of other M&A opportunities, including some involving smaller US operators with contiguous operations to Suddenlink's footprint.

Rogers disappointed

Rogers is Cogeco's largest long-term shareholder, holding a 33% economic stake in Cogeco. Rogers tried to appeal to Cogeco's board members and stakeholders with a pledge to invest up to $3 billion on infrastructure (including 5G network coverage expansions) in Quebec, keep Cogeco's brand and retain its headquarters in Montreal, and assign a Quebec president to lead the business in the province.

Rogers CEO Joe Natale still believes the deal would've been good for both sides.

"We're disappointed that we didn't get the ability to engage with either the Audet family or the Cogeco boards on what is a terrific offer, a highly valued offer," Natale said Wednesday at the RBC Capital Markets Global Technology, Internet, Media and Telecommunications Virtual Conference, according to a transcript. "But it wasn't meant to be; there wasn't any appetite to follow through or pursue."

Natale said Rogers will continue to look at the company's capital allocation and will go back to the board to talk next steps and review priorities going forward. "In the meantime, we continue to leverage the business we have in Quebec. We've been there for 35 years and we'll continue to build," he said.

Cogeco argued that a motivator behind Rogers's interest in joining Altice USA in a bid to divvy up Cogeco was to prevent Cogeco from entering the Canadian mobile market and competing with Rogers's mobile service.

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— Jeff Baumgartner, Senior Editor, Light Reading

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