Rogers (ROG) To Buy Shaw Communications (SJR) For $26 Billion

By Amit Chowdhry ● March 15, 2021
  • Rogers Communications Inc. (TSX: RCI.A and RCI.B) (NYSE: RCI) and Shaw Communications Inc. (TSX – SJR.B, SJR.PR.A, SJR.PR.B, NYSE – SJR, and TSXV – SJR.A) announced a deal for Rogers to buy all of Shaw’s shares in a $26 billion deal

Rogers Communications Inc. (TSX: RCI.A and RCI.B) (NYSE: RCI) and Shaw Communications Inc. (TSX – SJR.B, SJR.PR.A, SJR.PR.B, NYSE – SJR, and TSXV – SJR.A) announced today that they have reached an agreement for Rogers to acquire all of Shaw’s issued and outstanding Class A Shares and Class B Shares in a transaction valued at approximately $26 billion inclusive of approximately $6 billion of Shaw debt. The offer price of $40.50 per share represents a significant premium for Shaw shareholders. And the transaction is not subject to a financing condition as Rogers has secured committed debt financing – which it will use along with balance sheet cash and the issuance of 23.6 million shares to the Shaw Family Living Trust.

The combination of the two companies builds on the strong legacy of two family-founded Canadian companies. And the combined entity will have the scale, assets, and capabilities needed to deliver unprecedented wireline and wireless broadband and network investments, innovation and growth in new telecommunications services, and greater choice for Canadian consumers and businesses.  

As part of the deal, the combined company will invest $2.5 billion in 5G networks over the next five years across Western Canada, which will enhance competitiveness, offer consumers and businesses more choice and improved services, help close the digital divide between urban and rural communities, and deliver significant long-term benefits for businesses and consumers.

This deal will create Canada’s most robust wholly-owned national network. And 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 combination will also accelerate the delivery of critical 5G service across Western Canada, from rural areas to dense cities, more quickly than either company could achieve on its own. This will be accomplished by bringing together the expertise and assets of both companies, including Shaw’s existing cable, fiber, and wireless networks and Rogers’ national wireless network and extensive 5G capabilities.

Plus Rogers will commit to establishing a new $1 billion Rogers Rural and Indigenous Connectivity Fund dedicated to connecting rural, remote, and Indigenous communities across Western Canada to high-speed Internet and closing critical connectivity gaps faster for underserved areas. And as part of this fund, Rogers will consult with Indigenous communities to create Indigenous-owned and operated Internet Service Providers, which would leverage Rogers’ expanded networks and capabilities to create sustainable, local connectivity solutions.

The combined company is committed to continuing to offer affordable wireless plans, with no overage fees, that meet the budgets and needs of Canadians. And as part of this commitment, Rogers will not increase wireless prices for Freedom Mobile customers for at least three years following the close of the transaction.

To help individuals and families access affordable Internet services, Rogers will also expand its Connected for Success program nationally to reach every Canadian where the combined company offers Internet services. And this first-of-its-kind program is designed to help seniors and low-income Canadians who receive income assistance access low-cost, high-speed Internet, with multiple speed options to meet customers’ needs.

The scale created by this combination will enable a level of infrastructure expansion that is critical to drive growth, attract new consumer and business customers, and drive technology adoption. And upgrading Canada’s digital infrastructure and accelerating digitization is critical to diversifying and strengthening the country’s economy and innovation sector as well as fueling economic recovery.

After approved, the transaction is expected to generate significant growth and efficiency opportunities to support the accelerated investment into 5G capabilities and expanded urban and high-speed rural connectivity in Western Canada. And anticipated benefits include access to new services and capabilities for Shaw customers as well as savings opportunities for Rogers, such as reduced wholesale charges and network costs and the elimination of duplicative technology and infrastructure associated with greater scale.

KEY QUOTES:

“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. 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.”

— Joe Natale, President and CEO of Rogers Communications

“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. 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, Executive Chair & CEO, Shaw

“Today’s announcement brings two iconic Canadian family-founded businesses together with the expertise, combined assets, and scale to deliver the next generation of telecommunications to Canadian consumers and businesses. This is a transformational combination; and extends our company’s long legacy of innovation, entrepreneurship, and dedication to world-class service for decades to come.”

— Edward Rogers, Chairman of Rogers Communications

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.