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Mega deal will see Rogers become national telephone carrier

Mega deal will see Rogers become national telephone carrier

In a $20 Billion cash and stock offer Rogers Communications will expand its wireless telephone coverage across Canada. The Toronto-based telecom is offering $40.50 per share in cash to purchase all of the shares of Alberta-based Shaw Communications. The deal, amounting to approximately $20 billion reflects a premium of approximately 70% to Shaw’s recent Class B Share price.

When Rogers assumes $6 Billion in Shaw debt, the transaction will be worth $26 Billion. Rogers says it has already secured financing for the deal. Rogers is a major Eastern Canada wireless provider and Shaw primarily operates west of Ontario.

Other features of the agreement

The combined company will create a headquarters for all Western operations, Shaw’s 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.

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.

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. Rogers says in its news release, that the combined company will result in the highest quality mobile broadband and fixed wireless Internet services to more rural communities, in many cases for the first time.

The proposed deal throws a hot potato at the CRTC, which has vowed to lower cellular phone costs in Canada. The Rogers-Shaw merger would reduce the number of large cellular operators from four to three.

The deal has no impact on Shaw’s former broadcast properties—Corus and Global, which were spun off several years ago.

Both the Rogers and Shaw families got their start in Ontario. The late Ted Rogers was the son of radio pioneer Edward Samuel Rogers who invited the first radio that could be powered by household power (“Rogers Batteryless” accounted for the RB in CFRB). JR Shaw started out in Lambton Country as a contractor. He later started a pipe-coating company serving the oil and gas industry which is still based in Hamilton. His foray into cable was almost accidental. When he moved the family business to Calgary in 1961, he was disturbed to find only 3 TV channels available and that is when he got the idea to start a community antenna system that grew into Shaw Cable.

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