Rogers Communications really, really wants to get its hands on Cogeco, despite being told there's no interest to sell from Cogeco.
On Friday, Rogers ratcheted up the pressure on Cogeco by announcing it will invest $3 billion (Canadian) in Quebec's telecom networks if its attempt to take over Cogeco is successful.
Earlier this month, Altice USA and Rogers made a $7.8 billion cash offer to buy Cogeco (CGO) and Cogeco Communications. 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.
The Audet family has flat out refused the offer, and said it wasn't willing to negotiate further. 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 after Rogers and Cogeco exchanged letters around mid-September.
Rogers is putting pressure on Cogeco to sell by saying it's better equipped to expand rural connectivity and accelerate the rollout of 5G in Quebec. Rogers said it would have 5G enabled across 95% of Quebec over the next five years if the Audet family agrees to sell.
“Rogers is deeply committed to the future of innovation and the knowledge economy in Quebec. We would be honored to help enhance the customer experience and bring new investments including 5G that will fundamentally reshape the economic landscape of Quebec,” said Joe Natale, president and CEO of Rogers Communications, in a statement. “This is about the future, and helping ensure that Quebec’s ambitions around innovation, connectivity, health and education advancements are fully realized.”
Rogers said on Friday it would commit to spending $1.5 billion upgrading Quebec's networks over the five years, including boosting internet services to 100,000 rural households.
Rogers, which currently has 3,000 employees in Quebec, said there would be a total of 5,000 jobs if the deal goes through, and that it would maintain the Cogeco brand in Quebec.
Rogers would keep Cogeco's headquarters in Montreal, but install a president in Quebec to lead its business. Also among the laundry list of pledges, Rogers said it would establish a tech innovation hub in Quebec, which world create 300 new jobs, to foster the development of artificial intelligence, software engineering and digital technology.
On the cultural front, Rogers pledges to continue Cogeco's existing community partnerships and launch a new technology student program. Rogers would also establish a French language-training fund for its employees outside of Quebec.
While the Audet family has been firm in its refusal(s), today's press release looks like an attempt to win over support in Quebec to put added pressure on the Audet family.
"Rogers may continue making all the investments it wishes in Quebec, but it doesn't need Cogeco to do so," Cogeco said in a statement Friday afternoon. "If Rogers fails to invest, their competitors will take away its mobile customers, regardless of 5G. As far as Cogeco is concerned, the company remains focused on executing its profitable growth strategy, investing in its state of the art broadband networks and offering leading edge services to its customers."