Canadian cable MSOs Rogers Communications Inc. and Shaw Communications Inc. have announced an agreement that will see Rogers buy Shaw for approximately CAN$26 billion ($20.85 billion), inclusive of approximately CAN$6 billion ($4.8 billion) of Shaw debt.
Rogers says it will use a combination of committed debt financing and cash on hand as well as the issuance of 23.6 million shares to the Shaw Family Living Trust to support the transaction, which it expects to close in the first half of 2022, subject to customary conditions and approvals.
The agreement calls for Rogers to pay CAN$40.50 for each share of Shaw Class A Shares and Class B Shares. The Shaw Family Living Trust, which is Shaw’s controlling shareholder, and certain members of the Shaw family will receive 60% of the consideration for their shares in the form of 23.6 million Class B Shares of Rogers valued on the basis of the volume-weighted average trading price for the 10 trading days for the Rogers Class B Shares ending March 12, 2021, and the balance in cash.
If approved, the merger would essentially create a national cable MSO in Canada. To perhaps dampen anti-competitive concerns, Rogers asserts the combined company’s coast-to-coast fiber network will create a new competitor for business services provision against Bell and Telus. Rogers also says it will commit to spending CAN$2.5 billion ($2 billion) over five years to build 5G networks in Western Canada.
The company further pledged to create a CAN$1 billion ($80 million) Rogers Rural and Indigenous Connectivity Fund to support broadband access to rural, remote, and Indigenous communities across Western Canada as well. The broadband and wireless investments will create up to 3,000 net new jobs, Rogers asserted.
The tie up, “as a result of the combined spectrum holdings and enhanced capacity, will generate more choice and competition for businesses and consumers, as well as realizing the full benefits of next generation networks for Canadians and Canada’s productivity,” the two companies stated.
“We are proud to join forces with the Shaw family and team as we combine our companies and our 10,000 team members across Alberta, British Columbia, Manitoba, and Saskatchewan, supported by a head office in Calgary. Western Canada is a major driver of our national economy and together we will have the scale, expertise and commitment to deliver the technology infrastructure needed to keep local communities connected, businesses competitive and attract new investment,” said Joe Natale, President and CEO of Rogers Communications.
Natale added, “We’re at a critical inflection point where generational investments are needed to make Canada-wide 5G a reality. 5G is about nation-building; it’s vital to boosting productivity and will help close the connectivity gap faster in rural, remote and Indigenous communities. Fundamentally, this combination of two great companies will create more jobs and investment in Western Canada, connect more people and businesses, deliver best-in-class-services and infrastructure across the nation, and provide increased competition and choice for Canadian consumers and businesses.”
“Our two companies have been successful because of the foresight and vision of two great founders who were driven by their unrelenting pioneering spirit and entrepreneurial values. Without a doubt, my father would be proud of this moment, combining forces with the company founded by his old friend to deliver more Canadians world class connectivity, more choice, and better value,” commented Brad Shaw, executive chair and CEO of Shaw.
Shaw continued, “While unlocking tremendous shareholder value, combining these two great 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. This transaction will create benefits for generations to come.”
Brad Shaw and another director to be nominated by the Shaw family would join the Rogers board of directors when transaction closes. Learn more about the transaction.