The board of directors for Cogeco Inc. and Cogeco Communications Inc. say their independent members have rejected a unsolicited bid from a New York firm that offered $10.3 billion to buy the telecommunications companies.
The companies said the rejections followed board meetings and discussions with members of the Audet family that controls them.
Gestion Audem Inc., a company controlled by the members of the Audet family, said Wednesday that it does not intend to sell its shares and will not support the unsolicited proposal from Altice USA Inc.
The U.S. cable company made the offer as part of a deal that included a side arrangement that would see Rogers Communications Inc. buy Cogeco’s Canadian assets for $4.9 billion.
Gestion Audem holds 69 per cent of Cogeco’s voting rights and 82.9 per cent of voting rights at Cogeco Communications. Louis Audet is executive chairman of the companies.
Earlier Wednesday, Altice announced an all-cash cash offer that included $800 million to secure the ownership interests and voting shares held by Louis Audet and his family.
Altice would pay $106.53 per share for the remaining Cogeco Inc. subordinate voting shares and $134.22 per share for each Cogeco Communications Inc. subordinate voting share, a roughly 30 per cent premium on each stock’s one-month, volume-weighted average.
Altice also entered into an arrangement to sell Cogeco’s Canadian assets to Rogers, the Montreal-based company’s largest long-term shareholder, for $4.9 billion cash were the Cogeco bid accepted.
“As Cogeco’s largest long-term shareholder with deep roots in Quebec with approximately 3,000 employees, Rogers supports the value being created for all shareholders with the significant premium in the Altice USA offer,” spokeswoman Sarah Schmidt said in an email to The Canadian Press.
“We’re focused on speaking to shareholders, and trust the Cogeco Board will act in the best interest of all shareholders.”
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The proposal caused Cogeco Inc.’s shares to shoot up by almost 20 per cent to $94.57 in early afternoon trading, while Cogeco Communications Inc.’s reached $114.37, an increase of more than 15 per cent. Rogers’s hit $54.94, an almost five per cent increase.
This is the second time Rogers has been rebuffed in a move to wade into the Quebec market. Rogers tried to acquire Videotron in 2000, but the telecommunications company was eventually purchased by Quebecor.
Were the Cogeco deal to go through, Altice would own the company’s U.S. assets, including Atlantic Broadband, a cable operator providing residential and business customers with broadband, video and telephony services in 11 U.S. states.
The proposal would also benefit Rogers as it amalgamates Ontario cable assets, wrote Aravinda Galappatthige and Matthew Lee, analysts with Canaccord Genuity Corp, in a note to investors.
A successful bid could soften the threat of mobile virtual network operators (MVNO), who buy network capacity from wholesalers instead of running their own, they said.
Cogeco long pushed the Canadian Radio-television and Telecommunications Commission for a “hybrid MVNO” model, which would give companies with existing telecom infrastructure access to national wireless networks and the ability to resell the service to their customers.
“The hybrid MVNO model largely relies on the existence of localized wireline companies with the infrastructure and balance sheet to enter the wireless market and subsequently invest in their own networks,” they said.
“Naturally, Cogeco was the obvious choice for this, which could have increased the level of wireless competition in Ontario. It can be argued that if a transaction occurs, the threat of hybrid MVNO likely wanes.”
Galappatthige and Lee believe the offer made was attractive, but there is room for further negotiation.
They expect Altice and Rogers would be willing to increase their bid and that regulatory approval could be obtained.
Jayme Albert, a spokesperson for Canada’s Competition Bureau, said in an email to The Canadian Press that the federal body was aware of the Altice and Cogeco reports, but could not confirm whether it is reviewing the proposed transaction.
Under the Competition Act, mergers of all sizes and in all sectors of the economy are subject to review by the regulator to determine whether they will likely result in a substantial lessening or prevention of competition in any market in Canada, he said.
In general, the bureau must be given advance notice of proposed transactions when the target’s assets in Canada or revenues from sales in or from Canada generated from those assets exceed $96 million, and when the combined Canadian assets or revenues of the parties and their respective affiliates in, from or into Canada exceed $400 million, he added.
After hearing Gestion wouldn’t support the offer, Altice spokeswoman Lisa Anselmo said in an email to The Canadian Press that the company still believes its offer is “very attractive” and in the best interest of all shareholders.
“We look forward to hearing from the board,” she added.
Even if Cogeco accepts the offer, the Legault government appears ready to intervene.
“There is no question of letting this Quebec company move its head office to Ontario,” Quebec Premier Francois Legault said Wednesday during a radio interview with FM93, a Cogeco-owned station.
The premier didn’t give details about what he would have done.
Legault added that members of his government had spoken with Louis Audet on Wednesday morning.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
