MONTREAL – Cogeco Communications is selling its business information and communications technology services subsidiary Cogeco Peer 1 Inc. to investment firm Digital Colony for $720 million.
Cogeco Peer 1’s portfolio includes over 3,300 route kilometers of owned, dense metro fiber in greater Toronto and Montreal, as well as several data centers across North America and Europe. Wednesday’s announcement said that the company will remain headquartered in Toronto and adopt a new brand.
Cogeco Communications said that it will retain “significant” fibre capacity in Toronto and Montreal under the deal, adding that it has signed a commercial agreement with Digital Colony “aimed at better supporting their customers and further developing their respective businesses in the future.”
“Since Cogeco Communications acquired Peer 1 Hosting in 2013, the data centre and connectivity markets have evolved and consolidated significantly,” said Cogeco Communications president and CEO Philippe Jetté, in the news release. “In this context, we made the decision to focus Cogeco Communications’ resources on our Canadian and American broadband services businesses. This transaction will provide greater flexibility to pursue organic investment and acquisition opportunities.”
Cogeco will use a significant portion of the net proceeds from this sale to repay amounts outstanding under its term revolving facility and, subject to the approval of the Toronto Stock Exchange, to repurchase subordinate voting shares under a normal course issuer bid to be implemented after the closing of the transaction.
The completion of the transaction is subject to certain customary closing conditions, including receipt of certain regulatory approvals, and is expected to occur during the third fiscal quarter of 2019.
