Montreal: Groupe Videotron’s battle royal with Quebecor and the Caisse de Depot et du Placement du Quebec is headed to court April 17 when the cable-tv company, led by the Chagnon family, will argue the Caisse is abusing its veto right, and its 17% minority voting-share block does not give it an unfettered right to decide Videotron’s future.

On March 24, three days before Videotron shareholders were to meet to vote on Rogers Communications’ $5.6-billion stock merger, Quebecor and Caisse subsidiary Capital Communications cdpq unveiled an eleventh-hour $5.9-billion counterbid for Videotron.

The announced Quebecor-cdpq bid offers Videotron shareholders $49 a share, $28.42 to be provided in cash and the balance in shares of a new entity to be called Quebecor Media. Quebecor has also stated it will invest more than $1 billion in Quebecor Media, while cdpq says it will inject an additional $435 million.

A formal Quebecor offer – pending financing – had not been presented to shareholders at Playback press time.

Analysts told Playback the real value of the Quebecor bid, valued at up to $3 more per share than rci’s stock-swap offer, remains unclear since the non-cash portion of the offer is in shares of a company which does not yet exist.

Furthermore, the Quebecor bid price also includes TVA Group, which was excluded in the rci proposal.

The markets have punished all the players in the short run, seemingly spooked, or simply annoyed, at the prospects of a long, drawn-out and embittered court battle.

On March 27, a high-security special meeting of Videotron shareholders unanimously adopted a resolution suspending a vote on rci’s takeover bid, after the Caisse was granted a temporary court injunction (until April 3) preventing Videotron’s principal shareholders, the Chagnon family, from tabling their voting shares.

Without the injunction, analysts say the deal would have gone through.

The Caisse maintains it was not consulted on the Rogers deal, despite its privileged-shareholder’s right of veto in the event of a sale.

During a March 25-26 weekend interview on Reseau tva, an upset Claude Chagnon, Videotron’s ceo, described Quebecor’s counterbid as ‘poorly conceived,’ saying the action appeared to be ‘a vendetta’ led by Pierre Belanger, president of Capital Communications cdpq. Belanger was ‘asked to leave’ his senior management job with Videotron in ’97.

Chagnon maintains the Rogers bid is the best deal for Videotron shareholders, primarily because it unites cable interests as that sector prepares to do battle with telephone giant bce, something a Quebecor takeover will not do.

Chagnon also said if the family shares in Videotron can’t be sold to Rogers, the family may simply hang on to its shares.

In addition to the fundamental issue of shareholder interest, the battle for control of Videotron has taken on a ‘cultural,’ if not outright political, dimension.

La Presse editor Alain Dubuc has said an English Canada equivalent of the rci proposal might be akin to an at&t takeover of Bell Canada.

And former pq premier Jacques Parizeau weighed in calling the deal with Rogers ‘Toronto buying Montreal.’ Finance Minister Bernard Landry sounded positive at first about the rci bid following a private meeting with Claude Chagnon and Rogers ceo Ted Rogers. But last week, the minister seemed to have changed his mind, more or less discreetly siding with the Quebecor/cdpq counterbid.