Rogers, Shaw to Combine in $16 Billion Deal -- Update
March 15 2021 - 9:47AM
Dow Jones News
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)
Copyright (c) 2021 Dow Jones & Company, Inc.
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