The appointment of a new CEO likely means that Cogeco Communications (TSX:CCA) won’t be sold in the short term, but that possibility could eventually come into play says Canaccord Genuity analyst Aravinda Galappatthige.
This morning, Cogeco announced that Philippe Jette had been appointed as its new CEO. Jette joined the company in 2011 as Senior Vice President and Chief Technology and Strategy Officer.
“Philippe Jette has strong experience in the commercialization of communications services,” the company commented in a press release this morning. “Under his unifying leadership style, he conveys his vision and passion for the Company and fully endorses Cogeco’s values. An announcement regarding his replacement as President of Cogeco Peer 1 will be made in the coming weeks.”
Galappatthige says this move could cool speculation around the company’s future, but perhaps only for a time.
It has long been speculated that CCA could be a takeout candidate for Rogers Communications, given RCI’s ~33% (combined direct and indirect holdings) equity stake in CCA,” the analyst says. “However, in recent years speculation had subsided following CCA’s U.S. M&A expansion activities and Audet’s consistent comments on retaining ownership/control. With this management change, which will for the first time see non-family management assume the lead operational roles of CCA, we believe market speculation on the divestiture of CCA’s Canadian cable operations to RCI could reignite. While we do not see a near-term sale of the company, it is possible over the longer term We do not believe that a sale of the business is imminent because today’s press release emphasized that the Audet family intends to continue to develop the company “as it has done for the last 60 years”, very consistent with prior messages. Having said that, we see a compelling case that it could be sold over the longer term,”
In a flash research update to clients today, Galappatthige maintained his “Hold” rating and one-year price target of $73.00 on Cogeco.