(Bloomberg) — Quebecor Inc. has no immediate plans to join the fray with its own bid for Cogeco Inc., but left the door open to closer ties with its Montreal-based rival in the future.
Earlier this month, Altice USA Inc. and Rogers Communications Inc. launched a hostile $7.8 billion takeover bid for Cogeco, which, like Quebecor, operates in cable and broadband and owns media. Cogeco and its controlling shareholder, the Audet family, have repeatedly said they’re not interested.
“The Audet family has made it very clear a number of times, over the past few days, that they are not willing to entertain this deal. We have to respect that position,” Hugues Simard, chief financial officer of Quebecor, said at Bloomberg’s Canadian Fixed Income Conference on Tuesday. “At some point if we ended up working together, it is something that would make me happy, but it’s not something I’d comment on at this point.”
Cogeco’s Louis Audet.
Photographer: Christinne Muschi/Bloomberg
If successful, the Altice-Rogers bid would upend Quebec’s cozy telecommunications industry and create a larger competitor for Quebecor. Toronto-based Rogers has held a minority position in much-smaller Cogeco for decades, instigated by its late founder, Ted Rogers. However, Cogeco has been protected from takeover advances by the Audets, whose holding company controls the voting shares.
Rogers also has history with Quebecor, having launched a bid in 2000 for Quebec-based cable operator Videotron Ltd. — only to see Quebecor, working with the Caisse de depot et placement du Quebec, come in with a higher offer.
For now, Quebecor’s plan is to continue with its strategy of acquiring content companies, Simard said. The company is also focusing on operations, as it still has “quite a bit of runway” in Quebec.
“We’ve made, over the past few years, some acquisitions of content production capabilities and we’ll continue to do so, because that really feeds very well our ecosystem between our media properties and our telecom properties. Same with smaller cable companies,” he said.
Quebecor is working to lower its cost of debt and reduce its leverage but isn’t focused on getting a ratings upgrade, he added.
“Ultimately, an investment grade rating would of course allow us to do that — but at the end of the day, if there are other ways for us to tap the markets at a reasonable cost of debt, that certainly is something that we’ll be looking at,” he said.
Raising money through a sustainable bond is also a “very clear objective” of Quebecor in the near future, according to Simard.
S&P Global Ratings rates Quebecor Media and its Videotron subsidiary at BB+, or one step below investment grade, while Moody’s Investors Service has them at the equivalent rating, Ba1.
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