Canada’s two biggest cable companies agreed to merge Monday with Rogers Communications announcing plans to buy Shaw Communications in a deal worth $20 billion Canadian ($16 billion U.S.) that would create a powerhouse in video and wireless.
The purchase price includes the assumption of $6 billion in Shaw debt and equates to $40 a share, representing a 70% premium to Shaw’s recent stock price. The deal is in cash except for 60% of the Shaw family shares that will be exchanged for shares of Rogers and make the Shaw family one of the combined company’s largest stockholders. Synergies are expected to exceed $1 billion annually within two years of closing. (All figures are Canadian dollars unless otherwise indicated).
Both companies are family founded and publicly traded on the Toronto Stock Exchange but have significant U.S. shareholders. Shares are both jumped Monday on the deal news. The scale created by the combination will allow for infrastructure expansion critical to drive growth and technology adoption and attract new consumer and business customers, the companies said. It will remain one of the biggest employers in Western Canada.
“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 Rogers CEO Joe Natale.
The deal must be approved by Canadian regulators.
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