Rogers, Shaw to Combine in $16 Billion Deal -- Update

By Dave Sebastian

Rogers Communications Inc. has agreed to buy Shaw Communications Inc. for about 20 billion Canadian dollars, equivalent to roughly $16 billion, combining two Canadian communications companies as they seek to invest in Canada's rollout of fifth-generation wireless service.

The cash purchase price, at C$40.50 a share, reflects a premium of about 69.5% to Shaw's closing price Friday. The Shaw family will receive 23.6 million Class B shares of Rogers as part of the deal, making it one of the combined company's largest shareholders, the companies said.

The combined entity will invest C$2.5 billion in 5G networks over the next five years across Western Canada, a move they said would help close the digital divide between urban and rural communities.

The companies said they will continue offering wireless plans without overage fees, and Rogers won't increase wireless prices for Freedom Mobile customers for at least three years after the transaction's closing, expected in the first half of 2022.

The deal could lead to savings of more than C$1 billion a year within two years of closing and add to earnings and cash flow per share of the first year after closing, the companies said. Out of the deal, Rogers said it anticipates lower wholesale charges and network costs, as well as the elimination of duplicative technology and infrastructure.

Two members of the Shaw family will join Rogers's board, including Shaw Executive Chairman and Chief Executive Brad Shaw, the companies said. Mr. Shaw's father, JR Shaw, founded the company more than 50 years ago under the name Capital Cable Television Co.

"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," Mr. Shaw said.

Toronto-based Rogers said it would spend an additional C$3 billion for network, services and technology investments. It will also create a C$1 billion fund for connecting rural, remote and indigenous communities to high-speed internet in four Western Canadian provinces, Rogers said.

The broadband and wireless investments will create up to 3,000 net new jobs in Western Canada, the companies said. The Western head office of the combined company will remain at Shaw Court in Calgary, with the president of Western operations and other senior roles to be based there, the companies said. The combined company will have 10,000 people across Alberta, British Columbia, Manitoba and Saskatchewan, they said.

Michael Dabaie contributed to this article.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

March 15, 2021 09:32 ET (13:32 GMT)

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