- Rogers Communications (TSX:RCI.A) has sold its stakes in Cogeco (TSX:CGO) and Cogeco Communications (TSX:CCA) to the CDPQ (Caisse de dépôt et placement du Québec) for C$829 million
- The transaction results in a significantly reduced share count for Cogeco and a six-month advancement in Rogers’ deleveraging plan
- Cogeco is a North American telecommunications and media company serving 1.6 million residential and business customers
- The stocks of Rogers, Cogeco and Cogeco Communications are down by 0.45 per cent, up by 1.15 per cent and down by 5.85 per cent, respectively
Rogers Communications (TSX:RCI.A) has sold its stakes in Cogeco (TSX:CGO) and Cogeco Communications (TSX:CCA) to the CDPQ (Caisse de dépôt et placement du Québec) for C$829 million.
Cogeco will then repurchase the entire Cogeco stake, totaling 5,969,360 shares, for C$280 million for cancellation from CDPQ. This represents approximately 38.2 per cent of all outstanding Cogeco shares.
CDPQ will, in turn, sell 5,302,278 Cogeco Communications shares acquired from Rogers through a bought block trade facilitated by a syndicate of underwriters led by CIBC Capital Markets and UBS Securities Canada. The transaction will increase Cogeco Communications’ public float by 29.5 per cent.
Investors can click here to learn about the deal’s additional repurchases and secondary transactions.
Benefits to Cogeco and Cogeco Communications shareholders include enhanced net asset value per share and free cash flow per share, as well as improved trading liquidity for Cogeco Communications. Rogers, for its part, leaps six months ahead of its debt reduction plans and expects to post a debt leverage ratio of 4.7x by the end of 2023, down from 4.9x at the end of Q3.
The purchase price paid by CDPQ to Rogers was negotiated at arms’ length between the parties. For all other transactions, the purchase price for Cogeco shares was set at C$46.91, while the purchase price for each Cogeco Communications share was set at C$51.40, each representing a 10 per cent discount relative to closing prices on Monday.
“This transaction is a unique opportunity for the corporations to repurchase shares at an attractive price to realize multiple benefits, while ensuring we have the ability to deliver our strategic plan,” Philippe Jetté, president and chief executive officer of Cogeco and Cogeco Communications, said in a statement. “Given the current prices of our stocks, which we believe are undervalued, buying back shares represents an attractive use of our capital to build shareholder value.”
“Already active with Cogeco Communications through past acquisitions, CDPQ is supporting the growth projects of this leading telecommunications company as connectivity needs continue to grow. This major share purchase, orchestrated by CDPQ, is key for the company and its plan to develop the North American market,” said Kim Thomassin, executive vice president and head of Québec at CDPQ.
Cogeco is a North American telecommunications and media company serving 1.6 million residential and business customers. Its Cogeco Communications subsidiary provides Internet, video and phone services in Canada as well as 13 states in the United States.
Cogeco stock (TSX:CGO) is up by 1.15 per cent, trading at C$52.72 per share as of 11:22 am ET. The stock has lost 11.38 per cent year-over-year and 11.65 per cent since 2018.
Cogeco Communications stock (TSX:CCA) is down by 5.85 per cent, trading at C$53.77 per share. The stock has fallen by 29.04 per cent year-over-year and by 17.80 per cent since 2018.
Rogers is Canada’s leading wireless, cable and media company.
Rogers Communications stock (TSX:RCI.A) is down by 0.45 per cent, trading at C$61.42 per share. The stock is up by 0.36 per cent year-over-year and down by 13.19 per cent since 2018.
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