Rogers Communications is $241 million the richer since it lost its seven-month battle to take control of Groupe Videotron in mid-September. It is also all the more poised to sweep up its outstanding interest in Cogeco Cable, Ontario’s second largest cabler.

In the short run, [losing Videotron] is positive for Rogers,î says Doug Kirk, managing director, telecommunications, BMO Nesbitt Burns.

Firstly, the debt-laden cable giant walks away with a $241-million break fee, a term negotiated as part the original $5.6-billion ($45 per share) share-swap deal Rogers struck with Videotron in early February.

Secondly, if Rogers had succeeded in its takeover of Videotron, it would have had to issue 100 million new shares in order to facilitate the purposed stock merger, creating a substantial dilution for Rogers shareholders.

Videotron has 115 million shares outstanding.

On the flip side, losing the Videotron deal precludes the Toronto-based cabler from putting together its envisioned cable cluster.

Now, says Kirk, Rogers will likely move toward regional clustering. Cogeco takes them to that next step.î

In early April, Shaw Communications sold its roughly 4.5 million shares in Cogeco Cable and Cogeco Inc. to Rogers at $44 per share. Rogers also acquired an additional 1,234,700 subordinate voting shares of Cogeco Cable and 466,300 subordinate voting shares in Cogeco Inc. from a subsidiary of Shaw, bringing the cable giant’s interest in Cogeco Cable to 12.7% and in Cogeco Inc. to 11.3%.

It’s a good fit,î says Kirk, mirroring the sentiment of the Street.

As for Quebecor’s $5.9-billion ($49 per share) takeover, Kirk says, the deal was very highly priced.î So highly priced that after a seven-month fight against the print giant and its partner Caisse de depot et placement du Quebec, that included ongoing courtroom battles and accusations of nationalist agendas, Rogers has finally thrown in the towel.

On March 24, three days before Videotron shareholders were to meet to vote on Rogers’ stock merger, Quebecor and Caisse subsidiary Capital Communications cdpq unveiled their eleventh-hour counter1bid. The bid offered Videotron shareholders $49 a share, $28.42 to be provided in cash and the balance in shares of a new entity called Quebecor Media. The Quebecor bid included TVA Group, which was excluded in the Rogers proposal.

At Playback press time, there was no official announcement of the Quebecor deal, but reports indicate the possibility of Rogers cutting a partnership deal with Quebecor or taking a minority stake in Videotron. –

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