Cogeco Cable Signals Growth Intent With $200m Deal

Cogeco Cable Inc. (TSE:CCA, Mkt cap 2.21B, P/E 15.14, Div/yield 0.35/2.12, EPS 4.36, Shares 33.53M) has announced its resumption of growth with the acquisition of US cable company MetroCast Communications of Connecticut LLC for US$200 million.

Cogeco Cable growth acquisition US cable company MetroCast

Cogeco Cable signals growth with the acquisition of US cable company MetroCast

As The Globe and Mail reports, the Montreal-based company was determined to come good on its promise to look for US acquisition opportunities, having managed to reach its initial debt ratio target.

“Once our debt-to-EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) ratio came down to the level we had committed to … we wanted to resume growth,” Cogeco chief executive officer Louis Audet said in an interview.

The firm’s next aim it is to begin to flourish in the United States as it does in Canada, having gained a foothold in the country in 2012 with the purchase of Atlantic Broadband, Audet explained.

In a statement, Cogeco said that Atlantic Broadband will purchase the assets of MetroCast Connecticut, which boasts 23,000 TV customers, 22,000 internet customers and 8,000 phone customers in eastern Connecticut.

Cogeco is expecting to see somewhere in the region of $45 million in revenue and $21 million in EBITDA from MetroCast Connecticut this year.

The deal will be financed through debt issued by Atlantic Broadband, if all goes to plan, and should be wrapped-up by the third quarter of this year pending regulatory approvals.

Once the ink has dried, Cogeco is planning to make more US cable acquisitions, Audet confirmed. He believes that there is significant growth potential in MetroCast Connecticut’s geographic region as a result of lower penetration rates for cable-based television and internet services compared with its Canadian markets.

Cogeco Inc., formally known as Compagnie Générale de Communication (“General Communications Company”) is a diversified telecommunications and media company headquartered in Montreal, Quebec. The company serves residential and commercial customers through various subsidiaries. It provides cable television, telephone and Internet connectivity services to consumers in parts of Ontario, Quebec, and several regions of the United States. Its media subsidiary operates radio stations and a public transit advertising company in Quebec. Cogeco has expanded into business telecommunications and information technology services through its fibre-optic and data centre network.

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