The struggle for control of Groupe Videotron, Canada's third-largest cable supplier, is heating up again. Rogers Communications has gone to court in an effort to lift an injunction handed down in April that effectively prevents its merger with Videotron. In February, the nation's largest cableco tendered a bid for the company only to have it blocked by Videotron shareholder Caisse de dépôt et placement du Quebec, a large pension fund. At that time, the Caisse produced a shareholder agreement between itself and Videotron's controlling shareholders, the Chagnon family, that gives the pension fund effective veto power over a sale of Videotron. The Caisse then backed a hostile bid for Videotron by Quebecor, a publishing giant. Quebecor said it aspired to create a 'made-in-Quebec' version of the Time Warner/AOL "old media, new media" merger.
Earlier this month, Quebecor significantly upped the ante, tendering an US$3.3bn all-cash offer, equivalent to US$30 per share. Rogers has chosen to reply not with a counter offer but through the courts. The motion is scheduled to be heard this Friday.
Should the motion be denied, Rogers is will then be faced with the decision to improve its offer of US$26 per share and increase the value of a company analysts regard as already overvalued and thereby increasing Rogers' own indebtedness.