Canadian cable and media giant, Quebecor, Inc. (TSE:QBR.B) (TSE:QBR.A), announced plans to buy back 30.5 million shares of its newspaper and cable television unit, Quebecor Media, from the country’s largest pension fund manager, for C$1.5 billion.
Quebecor Media will purchase its own 20.3 million shares from Caisse de Depot et Placement du Quebec for C$1 billion. And, the parent company, Quebecor Inc., will pay C$500 million for 10.2 million shares. These will be debentures convertible into class B subordinate shares.
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Quebecor, which currently owns a 54.7 percent stake in Quebecor, Inc. (TSE:QBR.B) (TSE:QBR.A) Media, will increase its holdings to 75.4 percent after the transaction. By increasing its stake, the parent company will be able to keep a major part of Quebecor Media’s free cash flow, along with dividends. Pension fund manager Caisse will reduce its stake from 45.3 percent to 24.6 percent.
Quebecor, Inc. (TSE:QBR.B) (TSE:QBR.A) and Quebecor Media CEO Karl Peladeau said in a statement, that Quebecor, Inc. (TSE:QBR.B) (TSE:QBR.A) wanted to take advantage of the opportunity created by favorable conditions in the debt market to boost its stake in Quebecor Media. Quebecor Media has 43 newspapers under its belt, including Ottawa Sun, Toronto Sun and Calgary Sun. The company also operates in cable, broadcasting and publishing business.
“We believe in the company’s future,” he said in a statement. “Repurchasing a portion of the Caisse’s investment, while we continue our partnership, will allow us to benefit from the company’s expected growth over the next few years.” Peladeau further said that the deal won’t affect the financial flexibility that is necessary for the growth of capital intensive telecom business.
Caisse said that it hasn’t exited its entire stake in the company because Quebecor, Inc. (TSE:QBR.B) (TSE:QBR.A) Media still has the potential to create value. Caisse CEO Michael Sabia that the fund manager is currently rebalancing its portfolio by diversifying the major position they held in media and telecom sector.
The Canadian media giant employs over 16,000 people in Canada. By the end of June, the Caisse had C$165.7 billion in assets.