Following a major transaction involving Toronto-based Rogers Communications, the Caisse de dépôt et placement du Québec (CDPQ) has become a major shareholder in the Quebec telecommunications company Cogeco Communications.
In a press release released late Monday, Rogers announced the sale, for $829 million, of all the shares it previously held in Cogeco Inc. and its subsidiary Cogeco Communications.
Under the terms of the agreement, it is expected that Cogeco will then repurchase a portion of the shares exchanged, leaving the Caisse with approximately 16.1% of all outstanding shares of Cogeco Communications. Ultimately, the Caisse will hold $350 million in the capital of Cogeco Communications.
Rogers bails out
“We are delighted to have CDPQ even more present at our side,” declared Philippe Jetté, President and CEO of Cogeco Inc. and Cogeco Communications inc. “This transaction represents a unique opportunity for us to increase shareholder value, while continuing to implement our strategic plan,” added Mr. Jetté.
This sale comes as Rogers has been looking for months for a way to bail out following its acquisition of Shaw Communications earlier this year.
Fitch and two other rating agencies, DBRS Morningstar and S&P Global Ratings, lowered its credit rating after its acquisition of Alberta’s Shaw, made for more than $20 billion.
Third time in ten years
In a press release, the Caisse recalled having supported Cogeco on several occasions since the issuance of a first loan of $50M in 2013.
Four years later, in 2017, the Caisse also participated, to the tune of US$315 million, in the transaction which enabled the acquisition of MetroCast’s cable distribution systems in the United States. This US$1.4 billion transaction remains the largest acquisition in the history of Cogeco Communications to date.
“CDPQ wishes to support the growth projects of this important company in the telecommunications sector as connectivity needs continue to grow,” said its first vice-president and head of Quebec, Kim Thomassin.
“The repurchase of this major block of shares, orchestrated by CDPQ, is key for the company and the pursuit of its development plan in the North American market,” she added.
On the Toronto Stock Exchange, Monday, Cogeco’s stock closed at $52.12, down 19.42% since the start of 2023. That of Cogeco Communications closed at $57.11, down 26% since the start of 2023. 95% since January.