Benzinga | Mar 15, 2021 07:05AM EDT

Rogers Communications to Acquire Shaw Communications for CAD$40.50/Share in a Deal Worth CAD$26B

Highlights of the Transaction

Rogers to acquire all issued and outstanding Class A Shares and Class B Shares of Shaw for a price of $40.50 per share in cash, amounting to approximately $20 billion,Highlights of the Transaction

* Rogers to acquire all issued and outstanding Class A Shares and Class B Shares of Shaw for a price of $40.50 per share in cash, amounting to approximately $20 billion, which reflects a premium of approximately 70% to Shaw's recent Class B Share price

* Transaction valued at approximately $26 billion inclusive of approximately $6 billion of Shaw debt, equivalent to 10.7x 2021 Calendar Year EBITDA based on latest consensus estimates, or 7.6x post synergies

* Transaction to 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 at an exchange ratio of 0.70 reflecting the volume weighted average trading price of Rogers shares over the last 10 days

* The transaction is not conditional upon financing, as Rogers has secured committed financing to cover the cash consideration

* Pro forma leverage on closing is expected to be just over 5x and Rogers expects to maintain its investment grade rating

* 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

* Rogers pro forma dividend payout ratio declines to below 30% within 24 months of close

* Shaw family will become one of the largest shareholders in Rogers

* Brad Shaw, and another Director to be nominated by the Shaw family, will join the Rogers Board of Directors when transaction closes

* Transaction unanimously approved by the Rogers Board of Directors and unanimously recommended by the Shaw Board of Directors

* The Shaw family fully and irrevocably supports the transaction and anticipated benefits to customers, local communities and small businesses in Western provinces and Canada as a whole

Investments to Create Jobs and Connect Communities

* Rogers to invest $2.5 billion to build 5G network in Western Canada, driving economic growth and strengthening innovation sector

* New $1 billion fund dedicated to connecting rural, remote and Indigenous communities to high-speed Internet across the four Western provinces

* Additional $3 billion to support additional network, services, and technology investments

* Western head office of combined company to remain at Shaw Court in Calgary; President of Western operations and other senior roles to be based in Calgary

* Rogers to maintain and grow local Shaw jobs so that teams across Alberta, British Columbia, Manitoba and Saskatchewan will continue to serve customers and support local communities

* The combined company is committed to continue offering affordable wireless plans, with no overage fees, that meet the budgets and needs of Canadians. As part of this commitment, Rogers will not increase wireless prices for Freedom Mobile customers for at least three years following the close of the transaction