Cogeco decries “bad faith tactics”
MONTREAL and TORONTO — The latest maneuverings in the now open battle between Rogers and Cogeco — as the former persists in its efforts to take over the latter — were made public by Cogeco Wednesday.
After Rogers sent a letter Tuesday to Cogeco board member Louis Audet (president of Gestion Audem, the Audet family holding company and Cogeco’s controlling shareholder) suggesting Audet had behaved in an “unacceptable manner” after Altice USA and Rogers presented their joint proposal to buy the company on September 1, Cogeco published the Rogers letter on its website and issued a stern response in a press release today.
This is the latest in a back-and-forth tussle in which Rogers was a party to a $10.3-billion offer by Altice USA to buy Cogeco and Cogeco Communications, in which Rogers would have acquired all of Cogeco’s Canadian assets in a $4.9-billion side-deal with Altice.
As the designated representative for the Audet family, Louis Audet has made it quite clear his family has no intention of selling its controlling interests in Cogeco and Cogeco Communications, despite Rogers continuing to push for the proposed acquisition. On Tuesday (the same day Rogers sent its letter to Audet), Rogers CEO Joe Natale spoke a little about how the Cogeco acquisition would fit into Rogers’ 5G network plans, during BMO’s annual Media and Telecom conference.
In the private letter (now public) sent to Audet and Cogeco, Natale and Altice USA CEO Dexter Goei co-wrote: “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.”
What the Rogers/Altice letter suggests is that the buyout offer by Altice and Rogers was “summarily dismissed” without the two Cogeco boards undertaking “any appropriate process.”
“Indeed, not one of the customary procedures that directors are expected to follow when presented with potential changes of control were undertaken. The two boards did not establish independent committees that were properly advised. Our offer was not referred to the existing Strategic Opportunities Committee.
“These failures of the boards resulted in there being no comprehensive review and analysis of our offer or deep engagement with the controlling shareholder.” – Joe Natale and Dexter Goei
“These failures of the boards resulted in there being no comprehensive review and analysis of our offer or deep engagement with the controlling shareholder. In simple terms, the boards and their independent directors failed to fulfill their most basic duties in representing the shareholders they are duty bound to represent and protect,” reads the letter co-signed by Natale and Goei, who ask to speak directly with Cogeco lead director James Cherry.
In its response released after the close of markets Wednesday, Cogeco accuses the Rogers and Altice CEOs of making “untrue statements and unsubstantiated allegations” in their letter against the boards of directors of Cogeco and Cogeco Communications.
“As stated in our press release of September 2, 2020, after receiving your unsolicited, non-binding proposal, late in the afternoon on September 1, 2020, the independent members of both Boards of Directors met promptly on September 2, 2020 to discuss your proposal. Prior to those discussions, Mr. Audet met with the independent directors as a representative of the Audet family, provided absolute clarity regarding the intentions of the family, indicated that their shares were not for sale and confirmed that their position was not a negotiating tactic,” reads the Cogeco letter, signed by Cherry.
“From the outset, you have engaged in bad faith tactics, some of which created confusion in the market.” – James Cherry, Cogeco lead director
The Cogeco release goes on to say: “From the outset, you have engaged in bad faith tactics, some of which created confusion in the market. 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. 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.”
The Cogeco letter adds the company’s two boards are confident their process was proper and they have given the acquisition offer the due care and attention it deserves.
“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. Cogeco will focus on what matters — executing on our growth strategy, investing in our North American broadband and media platforms, including the previously announced $1 billion broadband investment in Canada over four years, and forging ahead with our mobile services expansion plan to provide more choice to customers,” it concludes.
In response to the Cogeco release, Rogers Communications and Altice USA issued a one sentence statement late Wednesday saying they’re not going away. “We remain committed to pursuing this transaction and are open to engaging with shareholders and the boards in a constructive manner.”
