Having spun its blueberry empire into an East Coast cable powerhouse, Halifax-based Bragg Communications Inc. is aiming for the big leagues of the Canadian cable industry.
The company has agreed to buy Persona Communications Corp. of St. John's from a group of private equity investors to become the No. 5 Canadian cable company and the only cable operator with networks in each province. It now plans to expand these provincial beachheads to narrow the gap with No. 4 Cogeco Inc.
While the price wasn't disclosed, it's certainly more than the $406-million that three private equity buyers paid for Persona in 2004.
It's not like the Bragg family hasn't built up cable networks before.
The owners of Oxford N.S.-based Oxford Frozen Foods, the world's largest blueberry processor, started Bragg Communications in 1971 when John Bragg set up a cable business in Amherst, N.S., with 3,000 subscribers.
Through capital investment, innovation and bolt-on acquisitions, the company's Eastlink unit has become the dominant cable company in Nova Scotia and Prince Edward Island with about 200,000 subscribers. It has also been an industry pioneer, in 1999 becoming the first Canadian cable company to offer a local phone service.
In an interview, co-chief executive officer Dan McKeen said the Persona acquisition - and the $104-million purchase of Amtelecom Income Fund of Aylmer, Ont., announced last month - give Bragg Communications clusters of subscribers around the country.
These clusters - notably Sudbury, Ont., the Delta region of British Columbia and Grande Prairie, Alta. - are important because they will allow the company to build out its network in a cost-effective manner.
"The absolutely nicest part of this acquisition is our strategies are so much in sync," Mr. McKeen said of the Persona purchase. "It's a big growth vehicle for us. We're not just absorbing it."
Once the deals are complete, Bragg Communications will have 490,000 subscribers, although Mr. McKeen admits the company has a long way to go to catch Montreal-based Cogeco, whose website boasts 1.5 million Canadian subscribers.
Mr. McKeen would not rule out other acquisitions. When asked how big an acquisition Bragg could make, he said: "Rogers would be a stretch," referring to Rogers Communications Inc., and would say nothing more.
Persona operates in seven provinces and brands itself as Amazing Persona, so much so that its receptionists answer the phone with the words, "Amazing Persona, can I help you?" Formerly known as Regional Cablesystems Inc., the publicly listed company went private in 2004 when it was bought by Dallas-based Hicks Muse Tate & Furst Inc. (now HM Capital Partners), TD Capital Canadian Private Equity Partners (now Birch Hill Equity Partners) and CIBC World Markets Inc.
Persona then had 223,000 subscribers and now has 260,000, suggesting Bragg is probably paying $470-million or more for Persona. An HM Capital spokesperson in New York declined to discuss the price, other than to say HM made "a very attractive return."
Amtelecom brought Bragg mainly rural subscribers in Ontario, and the joy of breaking up a deal announced by its main competitor.
Bell Aliant Regional Communications Income Fund, an affiliate of telecom giant BCE Inc., had agreed in February to buy Amtelecom for $95-million.
Bragg Communications, which is owned by the family of chairman John Bragg, intends to remain a private, family-owned company, and plans to build out its network with its own financial resources and bank debt, according to Mr. McKeen.
The Persona deal must be approved by the Canadian Radio-television and Telecommunications Commission and is expected to close between late August and late September.