Rogers says it has the support of the Shaw family
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Rogers Communications Inc. agreed to buy rival Shaw Communications Inc. in a $20 billion deal that would unite Canada’s two largest cable providers and shake up its wireless industry.
The $40.50-per-share cash offer has the support of Shaw’s board and isn’t conditional on financing, the companies said Monday. The proposal represents a 69 per cent premium over Shaw’s most recent closing price.
The transaction represents the merger of companies controlled by two of Canada’s most powerful business families, who have cooperated as well as competed over the years in the battle against telecommunications rivals Telus Corp. and BCE Inc.
Rogers and Shaw have carved up, and sometimes traded, rival cable territories — with Shaw focused on Canada’s western provinces and Rogers dominating Ontario. But Rogers has pulled far ahead of Shaw by virtue of its large wireless division, a business in which Shaw’s Freedom Mobile unit is a distant fourth place in Canada. That’s one reason Shaw’s share price has fallen over the past five years.
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The deal needs approval from the Canadian government, which would have to accept a reduction of competition in the wireless sector, as some parts of the country would go from four to three wireless providers. The review could take a year, and Rogers and Shaw don’t expect the transaction to close until the first half of 2022.
“This transaction will create long-term value for both companies’ shareholders, and just as important, this transaction will ensure Canada’s cable and wireless industry can support the significant capital requirements needed for 5G networks and the essential connectivity that rural Canadians desperately need,” Rogers Chief Financial Officer Tony Staffieri said on a conference call with analysts.
Shaw Chief Executive Officer Brad Shaw and another director nominated by the Shaw family will join the Rogers board. The Shaw family will also become a major shareholder in the combined company, with 60 per cent of its shares in Shaw Communications being exchanged for 23.6 million Class B shares of Rogers.
“Our families and our companies have known each other for many years and we hold similar values and philosophies,” Brad Shaw said. “For decades Rogers and Shaw have been friendly but intense competitors. But all the while we have respected each other, admired each other and learned from each other’s actions.”
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Rogers said the deal would add to earnings and cash flow per share in the first year after closing and that cost savings would top $1 billion annually within two years. Including debt, the transaction is worth about $26 billion.
Rogers has been trying to expand by acquisition recently, teaming up with Altice USA Inc. to launch a hostile bid last August for Quebec-based Cogeco Inc. and its subsidiary Cogeco Communications Inc. Cogeco’s controlling Audet family repeatedly rebuffed the bid, and it collapsed in November.
In November, Toronto-Dominion Bank analyst Vince Valentini said Shaw might have the most upside potential over the ensuing 18 months if it were to merge with Rogers.
The combined company would spend $2.5 billion to build a 5G network in western Canada and $3 billion on investments in network, service and technology, the companies said in a statement. Rogers’ western Canadian headquarters would be at Shaw’s current head office in Calgary.
“We have been clear that greater affordability, competition, and innovation in the Canadian telecommunications sector are as important to us as a government as they are to Canadians concerned about their cell phone bills,” Canadian Industry Minister Francois-Philippe Champagne said in an emailed statement. “These goals will be front and center in analyzing the implications of today’s news.”
https://news.google.com/__i/rss/rd/articles/CBMiYGh0dHBzOi8vZmluYW5jaWFscG9zdC5jb20vdGVsZWNvbS9yb2dlcnMtdG8tYWNxdWlyZS1zaGF3LWNvbW11bmljYXRpb25zLWluLWRlYWwtd29ydGgtMjYtYmlsbGlvbtIBjgFodHRwczovL2ZpbmFuY2lhbHBvc3QuY29tL3RlbGVjb20vcm9nZXJzLXRvLWFjcXVpcmUtc2hhdy1jb21tdW5pY2F0aW9ucy1pbi1kZWFsLXdvcnRoLTI2LWJpbGxpb24vd2NtLzE4NmM0M2Y5LTU5MGYtNDAyMC1iNGZjLTJmOWI4MGY3OTI0OS9hbXAv?oc=5
2021-03-15 11:37:46Z
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