Advertisement

Rogers set to buy Shaw in deal valued at $26 billion

Click to play video: 'Rogers signs deal to buy Shaw in deal valued at $26 billion' Rogers signs deal to buy Shaw in deal valued at $26 billion
WATCH: Rogers signs deal to buy Shaw in multi-billion dollar deal. – Mar 15, 2021

Rogers Communications Inc. has signed a deal to buy Shaw Communications Inc. in a deal valued at $26 billion, including debt.

The transaction, which would combine Canada’s two largest cable companies as well as their wireless networks, will require a variety of approvals from federal agencies.

Rogers chief executive Joe Natale told analysts in a morning conference call that it’s too early to speculate on whether the competitors will be required to divest any of their operations.

“But we feel confident this transaction will be approved,” Natale said.

Read more: Rogers vows to keep Cogeco in Quebec as part of takeover proposal

There’s little overlap between the Shaw and Rogers cable and internet businesses, which are in western and Eastern Canada respectively, so Natale said he thinks most of the focus will be on their wireless businesses.

Story continues below advertisement

“And I won’t get into sort of what is our thinking on that, for obvious reasons,” Natale said.

Click to play video: '‘It’s going to end up costing consumers more’: Global’s Anne Gaviola on possible Rogers–Shaw merger' ‘It’s going to end up costing consumers more’: Global’s Anne Gaviola on possible Rogers–Shaw merger
‘It’s going to end up costing consumers more’: Global’s Anne Gaviola on possible Rogers–Shaw merger – Mar 15, 2021

Rogers owns a national wireless network that does business under the Rogers, Fido and Chatr brands. Shaw owns Freedom Mobile and Shaw Mobile in Alberta, B.C. and Ontario.

Executives from the two companies revealed few details regarding how they expect to achieve $1 billion of synergies, which will be mostly from cost-savings.

Click to play video: 'Brad Shaw announces the launch of Shaw Mobile' Brad Shaw announces the launch of Shaw Mobile
Brad Shaw announces the launch of Shaw Mobile – Jul 30, 2020

However, they did say that savings in operating expenses will likely be more significant that savings from capital spending on equipment.

Story continues below advertisement

Rogers chief financial officer Tony Staffieri said that, with the regulatory approvals still at least a year away, there are too many variables to be decided to make predictions on cost cutting.

However, the joint news conference made it clear that the leadership of the two family-controlled companies believe there will be great benefits from the combination.

Read more: Shaw Communications says year off to great start despite pandemic

 

“While unlocking tremendous shareholder value, combining (the) companies also creates a truly national provider with the capacity to invest greater resources expeditiously to build the wireline and wireless networks that all Canadians need for the long term,” Shaw chief executive Brad Shaw said in statement.

Under the plan, Rogers will pay holders of Shaw’s class A and B shares $40.50 in cash per share, while the Shaw family will receive some of their payment in Rogers shares.

Shaw’s class B shares surged $9.97, or 41.7 per cent, to $33.52 on the Toronto Stock Exchange in early trading.

As part of the transaction, the companies said Rogers will invest $2.5 billion in 5G networks over the next five years across Western Canada.

Click to play video: 'Rogers waives $1,200 cable bill for 91-year-old long-term care resident' Rogers waives $1,200 cable bill for 91-year-old long-term care resident
Rogers waives $1,200 cable bill for 91-year-old long-term care resident – Feb 11, 2021

Rogers also says it will create a new $1-billion fund dedicated to connecting rural, remote and Indigenous communities across Western Canada to high-speed internet service.

Story continues below advertisement

The combined company will create a Western regional headquarters in Calgary, where the president of Western operations and other senior executives will be based.

Rogers said it has secured committed financing to cover the cash portion of the deal, while about 60 per cent of the Shaw family shares which will be exchanged for 23.6 million Rogers B-class shares.

Brad Shaw, and another director to be nominated by the Shaw family _ which will become one of the largest Rogers shareholders _ will be named to the Rogers board.

The deal requires shareholder and court approvals in addition to regulatory approvals from the Competition Bureau, CRTC and Ministry of Innovation, Science and Economic Development.

The special shareholder meetings are expected to be scheduled for May.

Sponsored content