UPDATE Rogers Communications Inc. (NYSE: RCI), based in Toronto, Ontario, is selling its entire stake in Cogeco Inc. and subsidiary Cogeco Communications Inc., for $620 million to the Quebec-based institutional investor Caisse de dépôt et placement du Québec (CDPQ). The transaction is a step towards paying down debt after its takeover of Shaw Communications, The Globe and Mail reported.
CDPQ will then sell some of those shares to the public as well as back to Cogeco Inc. through a complex series of deals, leaving it with a 16.1 percent stake in Cogeco Communications.
Cogeco, a telecom and media company based in Montréal, Quebec, operates in both Canada and the U.S. In Canada, Cogeco provides cable, internet, and phone services in Ontario and Quebec through its Cogeco Connexion subsidiary, and operates 23 radio stations in Quebec under Cogeco Media. In the U.S., Cogeco owns Breezeline (formerly Atlantic Broadband) which offers similar services in 11 states along the east coast.
Rogers, which first acquired a stake in Cogeco in 2000 by swapping cable assets with Calgary-based Shaw, is selling the stake in a private transaction roughly eight months after closing its highly contested $15 billion takeover of Shaw.
Rogers said the Cogeco sale will allow the company to reduce its debt leverage ratio faster than previously forecast.
“This sale further demonstrates our commitment to strengthen our investment grade balance sheet and aggressively reduce our debt leverage ratio,” Tony Staffieri, Rogers president and CEO, said in a statement.
Philippe Jetté, president and CEO of the Cogeco companies, said the deal presents “a unique opportunity for the Corporations to repurchase shares at an attractive price.”
Kim Thomassin, EVP and head of Quebec for CDPQ, said the deal allows the fund to help support Cogeco’s growth. With $317 billion of assets under management, CDPQ has a dual investment mandate of promoting Quebec’s economic development while generating returns.
“This major share purchase, orchestrated by CDPQ, is key for the company and its plan to develop the North American market,” Thomassin said.
By John Celentano, Inside Towers Business Editor
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