Rogers Communications Inc. (“Rogers”) and Shaw Communications Inc.
(“Shaw”) today announced 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 “Transaction”). The offer
price of $40.50 per share represents a significant premium for Shaw
shareholders; further details of the transaction are described
below. 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 Rogers and Shaw builds on the strong legacy
of two family-founded Canadian companies. 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 transaction, 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 transaction 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 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, fibre, and
wireless networks and Rogers’ robust national wireless network and
extensive 5G capabilities.
Additionally, 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. 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 continue offering
affordable wireless plans, with no overage fees, that meet the
budgets and needs of Canadians. 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.
In addition, 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. 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 the level of
infrastructure expansion that is critical to drive growth, attract
new consumer and business customers, and drive technology
adoption. 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.
Once 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. 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.
“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. “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,”
said Brad Shaw, Executive Chair & CEO, Shaw.
“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.”
Edward Rogers, Chairman of Rogers Communications,
said, “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.”
Create new jobs in Western Canada
In addition to unprecedented broadband and wireless investments
that will create up to 3,000 net new jobs, the combined company
would expand on Shaw’s legacy of commitment to Canada’s four
Western provinces:
- The combined company will create a headquarters for all Western
operations, at Shaw’s iconic Shaw Court in downtown Calgary and
remain one of the largest private sector employers in Western
Canada.
- The President of Western operations and other senior roles will
be based in the company’s Calgary headquarters, to lead the
combined company’s operations across Western Canada.
- Brad Shaw, and another Director to be nominated by the Shaw
family, will be named to the Rogers Board of Directors to assist in
driving the future success of the combined company, following the
completion and approval of the transaction.
- Shaw’s skilled workforce is integral to the success of the
combined company. Following the close of the transaction, Rogers
will maintain a strong local employee base in Western Canada so
that local teams can continue to serve local consumer, business and
government customers and their communities.
- The combined teams will be 10,000 people strong across Alberta,
British Columbia, Manitoba and Saskatchewan and will bring together
the best of two corporate cultures that are each passionate about
growth, serving customers and contributing to local
communities.
- The additional investment of the combined company will continue
to diversify the Alberta and British Columbia economies with next
generation economic opportunities, while strengthening its
commitment to research and development in Western Canada through
existing partnerships with the University of Calgary and the
University of British Columbia.
- Building on our existing commitment to R&D innovation in 5G
in Western Canada through our partnerships with UBC and University
of Calgary, Rogers will establish a new National Centre of
Technology and Engineering Excellence, located in Calgary, to
support the needs of the new combined company, creating
hundreds of new high skilled jobs and opportunities to work with
Canadian developers to create new consumer and business
applications and services.
Support and connect communities
Today approximately 10% of homes in Canada have no Internet
access and approximately 600,000 households in Western Canada still
cannot access the minimum Internet speeds recommended by the
federal government. This connectivity gap has been identified as
the number one issue impeding economic growth in rural and remote
communities.
Using the companies’ combined spectrum assets and infrastructure
for 5G across its expanded network, including Rogers national low
band 5G spectrum, the combined company will be able to bring the
highest quality mobile broadband and fixed wireless Internet
services to even more rural communities, in many cases for the
first time.
The combined company will help to further close the digital
divide by:
- Creating a new $1 billion Rogers Rural and Indigenous
Connectivity Fund to connect rural, remote, and Indigenous
communities across Western Canada to high-speed Internet, one of
the largest ever commitments of its kind made by the private
sector.
- Consulting with Indigenous
communities to create Indigenous-owned and operated Internet
Service Providers that leverage Rogers expanded networks and
capabilities to create sustainable, local connectivity
solutions.
- Extending Rogers Connected for
Success program across Western Canada to bring the first of its
kind low-cost broadband program nationally to help seniors and
low-income Canadians in every community where the combined company
offers Internet services.
Rogers will also build on Shaw’s activities and impact to
communities and charities, valued at more than $40 million in 2020.
In addition to Rogers existing robust community impact programs,
this includes commitments to:
- Continue and augment Shaw’s charitable giving programs,
including adding new youth scholarships to support the future
talent pipeline in emerging technologies.
- Work with the Shaw Charity Classic partners to support and
extend the annual PGA TOUR Champions event for up to ten years. The
event has raised more than $61 million for Alberta kids’ charities
since 2013.
Deliver affordable services and improve choice for
customers
In addition to dramatically improved connectivity and
accessibility, the combination will deliver choice, competition and
affordability to Canadians:
- The combined company
is committed to continue offering affordable wireless plans, with
no overage fees, that meet the budgets and needs of Canadians. 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.
- The combined company’s coast-to-coast fibre network would
create new competition for Bell and Telus for large enterprise and
government customers across Canada.
- Today many rural communities are
served by only one provider. With Rogers investment in broadband in
Western Canada and deployment of spectrum assets and infrastructure
for 5G across its expanded network, including its national low band
5G spectrum, Rogers will bring the highest quality mobile broadband
and fixed wireless Internet and service to residents of many rural
communities for the first time. These new services will deliver
significantly better connectivity and offer new choice to these
communities.
Details of the Transaction
Under the terms of the Transaction, holders of Shaw Class A
Shares and Class B Shares will receive $40.50 per share in cash.
The Shaw Family Living Trust, the controlling shareholder of Shaw,
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.
The Transaction will be implemented by way of a court-approved
plan of arrangement under the Business Corporations Act (Alberta).
The Transaction requires the approval of two thirds of the votes
cast by the holders of Shaw’s Class A Shares and Class B Shares at
a special shareholders meeting to be held in May 2021 (the
“Special Meeting”), voting separately as a class,
as well as majority of the minority approval under Multilateral
Instrument 61-101 Protection of Minority Security Holders in
Special Transactions. The Shaw Family Living Trust has irrevocably
agreed to vote all of its Class A Shares (representing 79% of the
outstanding Class A Shares) and Class B Shares in favour of the
Transaction.
The Transaction is subject to other customary closing conditions
including court and stock exchange approval, as well as approvals
from Canadian regulators. Rogers and Shaw intend to work
cooperatively and constructively with the Competition Bureau, the
Ministry of Innovation, Science and Economic Development (“ISED”)
and the Canadian Radio-television and Telecommunications Commission
(“CRTC”). Subject to receipt of all required approvals, closing of
the Transaction is expected to occur in the first half of 2022.
Under the Arrangement Agreement, Rogers has the right to cause
Shaw to redeem its outstanding preferred shares on June 30, 2021 in
accordance with their terms by providing written notice to
Shaw. As of the date of this news release, Rogers has not
exercised this right.
Shaw will continue to pay its regular monthly dividends of
$0.098542 in cash per Class A Share and $0.09875 in cash per Class
B Share, and its regular quarterly dividend on its preferred shares
in accordance with their terms.
A Special Committee of independent directors of Shaw has
unanimously recommended the Transaction, and Shaw’s Board of
Directors has unanimously (subject to abstentions of any conflicted
Directors) approved the Transaction and unanimously recommends that
Shaw shareholders (other than the Shaw Family Living Trust) approve
it. Shaw’s Directors andsenior management have agreed to vote all
of their shares in favour of the Transaction.
TD Securities Inc. and CIBC World Markets Inc. have provided an
opinion to the Board of Directors and the Special Committee,
respectively, to the effect that, subject to the assumptions,
limitations and qualifications set out in such opinions, the
consideration to be received by Shaw shareholders (other than the
members of the Shaw family) in connection with the Transaction is
fair, from a financial point of view, to such shareholders.
Further information regarding the Transaction will be contained
in a management information circular that Shaw will prepare, file
on SEDAR and mail to its shareholders in advance of the Special
Meeting. Copies of the arrangement agreement and voting support
agreements will also be available on the SEDAR profiles of Rogers
and Shaw at www.sedar.com.
Rogers has retained BofA Securities and Barclays as its
financial advisors and Goodmans LLP as its legal advisor. Torys LLP
is the legal advisor to the Rogers Control Trust. Shaw has retained
TD Securities Inc. as its exclusive financial advisor and Davies
Ward Phillips & Vineberg LLP and Wachtell, Lipton Rosen &
Katz as its legal advisors. CIBC World Markets Inc. is acting as
independent financial advisor to the Special Committee and Burnet,
Duckworth & Palmer LLP is independent legal advisor to the
Special Committee. The Shaw Family Living Trust has retained
Dentons Canada LLP as its legal advisor.
Call details
Rogers and Shaw will host a conference call for financial
analysts at 8:00 AM Eastern Time today (6:00 AM Mountain Time) to
discuss this announcement.
To participate, please dial +1-416-915-3239 or toll-free
1-800-319-4610 before the start of the call. A live audio webcast
of the call can be accessed here https://investors.rogers.com
Contact details
Rogers:
Investment community contact:
Paul Carpinopaul.carpino@rci.rogers.com647.435.6470
Media contact:
Rogers Communicationsmedia@rci.rogers.com1-844-226-1338
Shaw Contact
Investment community contact:Shaw Investor
Relations investor.relations@sjrb.ca
Media Contact:
Chethan Lakshman, VP, External
Affairschethan.lakshman@sjrb.ca(403) 930-8448
Cautionary statement
This news release includes “forward-looking
information” within the meaning of applicable securities laws
relating to, among other things, the anticipated benefits of the
transaction, including corporate, operational, scale and other
synergies and the timing thereof, the ability to integrate the
business of Rogers and Shaw, Shaw’s ability to redeem the preferred
shares and the timing thereof, the timing and anticipated receipt
of required shareholder, regulatory court, stock exchange or other
approvals, the ability of the parties to satisfy the other
conditions to the closing of the transaction and the anticipated
timing for closing of the transaction. Forward-looking information
may in some cases be identified by words such as “will”,
“anticipates”, “expects”, “intends” and similar expressions
suggesting future events or future performance.
We caution that all forward-looking information
is inherently subject to change and uncertainty and that actual
results may differ materially from those expressed or implied by
the forward-looking information. A number of risks, uncertainties
and other factors could cause actual results and events to differ
materially from those expressed or implied in the forward-looking
information or could cause our current objectives, strategies and
intentions to change. Accordingly, we warn investors to exercise
caution when considering statements containing forward-looking
information and that it would be unreasonable to rely on such
statements as creating legal rights regarding our future results or
plans. We cannot guarantee that any forward-looking information
will materialize and you are cautioned not to place undue reliance
on this forward-looking information. Any forward-looking
information contained in this news release represent expectations
as of the date of this news release and are subject to change after
such date. However, we are under no obligation (and we expressly
disclaim any such obligation) to update or alter any statements
containing forward-looking information, the factors or assumptions
underlying them, whether as a result of new information, future
events or otherwise, except as required by law. All of the
forward-looking information in this news release is qualified by
the cautionary statements herein.
Forward-looking information is provided herein
for the purpose of giving information about the proposed
transaction referred to above and its expected impact. Readers are
cautioned that such information may not be appropriate for other
purposes. The completion of the above-mentioned proposed
transaction is subject to customary closing conditions, termination
rights and other risks and uncertainties including, without
limitation, court, shareholder and regulatory approvals.
Accordingly, there can be no assurance that the proposed
transaction will occur, or that it will occur on the terms and
conditions contemplated in this news release. The proposed
transaction could be modified, restructured or terminated. There
can also be no assurance that the strategic benefits and
competitive, operational and cost efficiencies expected to result
from the transaction will be fully realized. In
addition, if the transaction is not completed, and each of the
parties continues as an independent entity, there are risks that
the announcement of the transaction and the dedication of
substantial resources of each party to the completion of the
transaction could have an impact on such party’s current business
relationships (including with future and prospective employees,
customers, distributors, suppliers and partners) and could have a
material adverse effect on the current and future operations,
financial condition and prospects of such party.
A comprehensive discussion of other risks that impact Rogers and
Shaw can also be found in their public reports and filings which
are available under their respective profiles at www.sedar.com.
About Rogers CommunicationsRogers is a proud
Canadian company dedicated to making more possible for Canadians
each and every day. Our founder, Ted Rogers, purchased his first
radio station, CHFI, in 1960. We have grown to become a leading
technology and media company that strives to provide the very best
in wireless, residential, sports, and media to Canadians and
Canadian businesses. Our shares are publicly traded on the Toronto
Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock
Exchange (NYSE: RCI).
About Shaw Communications Shaw
Communications Inc. is a leading Canadian connectivity company. The
Wireline division consists of Consumer and Business services.
Consumer serves residential customers with broadband Internet, Shaw
Go WiFi, video and digital phone. Business provides business
customers with Internet, data, WiFi, digital phone and video
services. The Wireless division provides wireless voice and LTE
data services.
Shaw is traded on the Toronto and New York stock exchanges and
is included in the S&P/TSX 60 Index (Symbol: TSX - SJR.B,
SJR.PR.A, SJR.PR.B, NYSE – SJR, and TSXV – SJR.A). For more
information, please visit www.shaw.ca
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