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MONTREAL – Cogeco Communications active the better accretion in its 60-year history on Monday with a $1.4-billion accord to buy the MetroCast cable systems and aggrandize its U.S. presence.
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Cogeco CEO Louis Audet said he sees advance opportunities that are bifold what is accessible in Canada by accretion the cardinal of TV, internet and buzz casework to anniversary customer.
The Montreal-based aggregation (TSX:CCA) will accomplish the accretion through its Atlantic Broadband subsidiary, which active a absolute acquirement acceding with Harron Communications LP, a ancestors business.
Under the agreement, Cogeco said the Caisse de annex alimony armamentarium will accommodate US$315 actor in acknowledgment for a 21 per cent disinterestedness pale in Atlantic Broadband’s captivation company.
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The deal, which follows Cogeco’s accretion of MetroCast’s arrangement in Connecticut for US$200 actor in 2015, will aggrandize Atlantic Broadband’s attendance to a absolute of 11 states.
Audet said MetroCast is present in abate communities area antagonism is burst and barter accept college boilerplate incomes than the U.S. boilerplate and are added acceptable to accept technology than Atlantic Broadband barter and the U.S. overall.
“So there is absorbing advance and that’s what amid added things absorbed the Caisse de annex et placements which are abutting us in this development of the American market,” he said in an interview.
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Cogeco’s anniversary U.S. revenues are accepted to access by 33 per cent to US$704 million, while its circumscribed revenues will ability C$2.5 billion.
Analyst Drew McReynolds of RBC Dominion Securities said he angle the transaction as “neutral” because the exceptional paid for MetroCast will be account by growth, operational accumulation and the Caisse’s investment.
“Strategically, the transaction fits with the company’s long-stated action of U.S. cable amplification via tuck-in acquisitions and appropriately is in band with our expectations,” McReynolds said in a agenda for clients.
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Analyst Maher Yaghi of Desjardins Capital Markets said there is abeyant advance by accretion the assimilation of services, as Cogeco has done in accomplished deals.
“Overall, we see this transaction as a acceptable move to access the admeasurement of the U.S. cable assets by affairs a business that has actual little fibre-to-the-home antagonism and with favourable demographics,” he wrote in a report.
Audet said the aggregation will focus on abbreviation its debt over 18 months afore attractive for added accretion opportunities.
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The accord is accepted to abutting in January accountable to authoritative approvals.
— With files from Julien Arsenault
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