Canada's Rogers, Shaw to merge in C$26B deal

Canadian communications company Rogers Communications Inc. agreed to buy all of Shaw Communications Inc.'s issued and outstanding Class A shares and Class B shares in a deal valued at about C$26 billion, including nearly C$6 billion of Shaw debt.

Under the terms of the deal, holders of Shaw Class A shares and Class B shares will receive C$40.50 per share in cash. Shaw's controlling shareholder, Shaw Family Living Trust, and certain members of the Shaw family, will receive 60% of the consideration for their shares in the form of 23.6 million Class B shares of Rogers valued on the basis of the volume-weighted average trading price for the 10 trading days for the Rogers Class B shares ending March 12, and the balance in cash.

The transaction offers Rogers the right to cause Shaw to redeem its outstanding preferred shares on June 30 in accordance with their terms by providing written notice to Shaw. Rogers has not yet exercised this right, the company said in a press release.

The deal, which will be implemented through a court-approved plan of arrangement, is expected to close in the first half of 2022, subject to receipt of all required approvals, including Canadian regulators' and stock exchange approvals.

A special committee of independent directors of Shaw unanimously endorsed the deal, and Shaw's board unanimously approved the deal and recommended that Shaw shareholders approve it. Shaw's directors and senior management agreed to vote all of their shares in favor of the deal.

The deal requires the approval of two-thirds of the votes cast by the holders of Shaw's Class A shares and Class B shares at a special shareholders meeting that is due to be held in May. The Shaw Family Living Trust irrevocably agreed to vote all of its Class A shares and Class B shares in favor of the deal.

Shaw CEO and Executive Chair Brad Shaw, alongside another director to be nominated by the Shaw family, will join Rogers' board after deal closure and approval.

The combined company plans to invest C$2.5 billion in 5G networks over the next five years across Western Canada and aims to create up to 3,000 net new jobs. It will also set up a new C$1 billion Rogers Rural and Indigenous Connectivity Fund to bring high-speed internet to rural, remote and indigenous communities across Western Canada.

Rogers said it will not raise wireless prices for Freedom Mobile customers for at least three years following deal closure.

Rogers retained BofA Securities and Barclays as its financial advisers and Goodmans LLP as its legal adviser. Torys LLP is the legal adviser to the Rogers Control Trust.

Shaw retained TD Securities Inc. as its exclusive financial adviser and Davies Ward Phillips & Vineberg LLP and Wachtell Lipton Rosen & Katz as its legal advisers. The Shaw Family Living Trust retained Dentons Canada LLP as its legal adviser.