Quebecois’s counter Rogers

Court grants injunction to stop vote, matching bid made

MONTREAL — Two of Quebec’s most powerful financial players have stepped in to block Rogers Communications’ bid for Montreal-based cable company Groupe Videotron.

Quebecor, a Montreal company with extensive holdings in newspapers, commercial printing, and broadcasting, and the Caisse de Depot et Placement du Quebec, the Quebec government’s wealthy pension-fund manager, have made a counter-offer to acquire Videotron for C$5.9 billion ($4 billion) in cash and stock.

Last month, Rogers, Canada’s top cable operator, inked a deal with Videotron, the country’s third-largest cable company, to take over Videotron for about $4.1 billion in stock (Daily Variety, Feb. 8). Videotron shareholders were to have voted on the Rogers agreement at a meeting today, but Quebec Superior Court granted Quebecor and the Caisse an injunction on Friday to stop the vote. The injunction expires on April 3.

The Caisse owns only 17% of Videotron, but it has a 1995 agreement with company owners the Chagnon family that allows the pension fund to nix any sale of the company.

Execs at Rogers were dismayed by Friday’s turn of events. The Toronto-based cable giant is consolidating its base in Canada in order to compete with other communications companies, most notably BCE, parent company of Bell Canada. On Thursday, Rogers had signed a deal with cable rival Shaw Communications to divvy up cable properties in Canada to give Rogers control of Quebec and Ontario and allow Shaw to dominate in the West. Rogers’ takeover of Videotron is a key part of this strategy.

David Robinson, VP of financial planning and investor relations at Rogers, said the company has yet to formulate its response to the Quebecor/Caisse bid for Videotron, but he made it clear that Rogers execs believe the fight is not over. Indeed, there may be an expensive bidding war for the Montreal cable company.

“The Chagnon family maintains their unconditional support for our offer,” Robinson said. “It’s difficult to see how you could create a better offer than Rogers’ offer.”

The Quebecor/Caisse offer proposes to give Videotron shareholders $34 per share, with $19 per share in cash and the balance in shares of a new entity, Quebecor Media, to be created as part of the deal. Quebecor would invest $684 million in Quebecor Media and transfer to it a host of Quebecor assets, including e-commerce company Informission Group, its investment in national newspaper chain Sun Media Corp., the assets of Quebec New Media and its holdings in book publishing, alternative newspapers and music retail stores. The Caisse would invest $298 million in Quebecor Media. Following the transaction, Quebecor and the Caisse would hold 54.6% and 14% respectively in Quebecor Media.

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