The Caisse de dépôt et placement du Québec (CDPQ) has become a major shareholder in Quebec telecommunications company Cogeco Communications following a major transaction with Toronto-based Rogers Communications.
In a news release issued late Monday, Rogers announced the sale of all shares previously held in Cogeco Inc. for $829 million. and its subsidiary Cogeco Communications.
Under the terms of the agreement, Cogeco is then expected to repurchase a portion of the exchanged shares, giving the Caisse approximately 16.1% of all outstanding shares of Cogeco Communications. Ultimately, the Caisse will hold $350 million of Cogeco Communications' capital.
Rogers gets out
“We are pleased to have CDPQ even more present at our side,” said Philippe Jetté, President and CEO of Cogeco Inc. and Cogeco Communications Inc. “This transaction represents a unique opportunity for us to increase shareholder value and at the same time our continue to implement our strategic plan,” added Mr. Jetté.
This sale comes as Rogers has been looking for a rescue option for months following its acquisition of Shaw Communications earlier this year.
Fitch and two other ratings agencies, DBRS Morningstar and S&P Global Ratings, cut their credit ratings after acquiring Alberta-based Shaw for more than $20 billion.
For the third time in ten years
In a press release, the Caisse recalled that it had supported Cogeco on several occasions since granting an initial loan of $50 million in 2013.
Four years later, in 2017, the Caisse also contributed $315 million to the transaction that enabled the acquisition of MetroCast's cable distribution systems in the United States. This $1.4 billion transaction remains the largest acquisition in Cogeco Communications' history.
“CDPQ wants 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 large block of shares organized by CDPQ is crucial for the company and the pursuit of its development plan in the North American market,” she added.
On the Toronto Stock Exchange, Cogeco shares closed at $52.12 on Monday, down 19.42% since the start of 2023. Cogeco Communications shares closed at $57.11, down 26% since the start of 2023. 95% since January.
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