A takeover battle by Rogers Communications and Altice USA to acquire Cogeco and its subsidiary has gone to the trenches with dueling letters this week.
On the morning of Sept. 2, Rogers and Altice USA went public with an unsolicited offer to buy Cogeco and its subsidiary Cogeco Communications, for $7.8 billion in cash. The same day, Cogeco rejected the offer.
Rogers Communications owns a 41% share in Cogeco and a 33% stake in Cogeco Communications while the Audet family owns 69% of the voting rights in Cogeco. Under the terms of the proposed bid, Rogers would gain control of Cogeo's Canadian assets while Altice USA would own U.S.-based Atlantic Broadband.
In a Wednesday letter to Rogers CEO Joe Natale and Altice USA CEO Dexter Goei, Cogeco lead director James Cherry said Rogers and Altice USA engaged in "bad faith tactics, some of which created confusion in the market," in their offer.
Cherry also said that Altice USA and Rogers had made their offer to Cogeco privately on Sept. 1, but then unexpectedly announced it the following day.
"Your proposal of September 1, 2020 offered to respond to any questions we may have and concluded by stating that you looked forward to our response," Cherry said in Wednesday's letter. "However, minutes before the open of markets the following morning, without any warning and thereby depriving us of an opportunity to respond, you publicly announced your proposal in which you said that the support of the Audet family was necessary to complete a transaction, yet you failed to disclose that they had rejected your proposal 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 said the Sept. 2 offer acknowledged that Rogers and Altice USA needed to garner support from the Audet family, but failed to mention that the Audet family had rejected it the day before.
On Tuesday, Altice USA and Rogers Communications sent a letter to Cogeco Executive Chairman Luis Audet that said: "Our offer was rejected without the directors and separately the independent directors undertaking any appropriate process."
"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," the letter said. The letter said near the end that Rogers and Altice USA wanted to meet with Cherry this week.
In his response on Wednesday, Cherry indicated that Cogeco was moving on from Rogers and Altice USA's takeover bid by focusing on its $1 billion broadband investment in Canada over the next four years.
"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," Cherry said.
While Cogeco considers the talks done, Rogers and Altice USA aren't giving up.
"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 on Wednesday.