07:48 AM EDT, 03/15/2021 (MT Newswires) -- Rogers Communications Inc. (RCI-A.TO, RCI-B.TO) and Shaw Communications Inc. (SJR-B.TO) have agreed for Rogers to acquire Shaw in a transaction valued at approximately $26 billion. Shaw's directors and senior management will vote all of their shares in favour of the transaction, and the Shaw family also "fully and irrevocably" supports the deal. This assurance comes after Rogers had previously failed to get hold of another smaller rival, Cogeco (CGO.TO, CCA.TO), after the controlling family there blocked the planned move.
The $26 billion price tag includes $6 billion of Shaw debt and the offer price of $40.50 per share represents a premium of approximately 70% to Shaw's recent Class B Share price. The transaction is not subject to a financing condition and will be funded by cash consideration of $40.50 to all shareholders, with the exception of approximately 60% of the Shaw family shares which will be exchanged for 23.6 million Class B Shares of Rogers. The Shaw family will become one of the largest shareholders of Rogers. Brad Shaw, and another director to be nominated by the Shaw family, will join the Rogers Board.
Synergies are expected to exceed $1 billion annually within two years of closing, and the transaction will be significantly accretive to earnings and cash flow per share as of the first year after closing
The merged company will invest $2.5 billion in 5G networks over the next five years across Western Canada. 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, according to the press statement. The combined company's coast-to-coast fibre network would create new competition for Bell (BCE.TO) and Telus (T.TO) for large enterprise and government customers across Canada, the release added.
Rogers will also establish a $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. Rogers will consult with Indigenous communities to create Indigenous-owned and operated Internet Service Providers.
The combined company is committed to continue offering affordable wireless plans, with no overage fees. will also not increase wireless prices for Freedom Mobile customers for at least three years following the close of the transaction.
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