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Cogeco Cable Inc. has sold its struggling Portuguese division, Cabovisão - Televisão por Cabo SA, to European Group ALTICE for 45 million euros ($59.3 million).
The Montreal-based telecommunications company announced both the sale and the closing of the transaction on Wednesday. It noted the sale price has been received but could be adjusted to reflect certain "contingency claims."
Investors reacted by bidding up Cogeco's (CCA-T) shares during Wednesday trading on the Toronto Stock Exchange.
The sale of the Portuguese subsidiary, while widely anticipated for months, marks the end of a difficult saga for Cogeco.
The company initially acquired Cabovisão for $660 million in 2006. But even at the outset, the deal proved controversial with some Cogeco investors who worried the Portuguese cable provider would sidetrack executives and become a drag on the company's earnings.
Since that time, Cabovisão has struggled with subscriber growth and its woes have been aggravated by Portugal's flagging economy. The global recession and subsequent European debt crisis have caused consumers to slash their household spending as they grapple with high unemployment and rising taxes.
During the third-quarter of 2011, Cogeco Cable completely wrote off its net investment in Cabovisão, which resulted in a $56.7-million loss for the period.