Rogers to buy Shaw Communications in a $26B deal
Rogers Communications Inc. has made its long-anticipated move to buy Shaw Communications Inc., offering to acquire the telecom company for $40.50 per share, or $26 billion including debt. The deal has the support of the controlling Shaw Family Trust.
Shares of Shaw surged on the deal's announcement but traded well below the offer price, indicating some skepticism such a tie-up could be consummated. The offer faces a number of key hurdles, including multiple layers of regulatory approvals due to the tightly protected nature of the Canadian telecom business and a long runway to the anticipated close of the transaction sometime in the first half of 2022.
Below is a roundup of analyst reaction to the friendly bid:
“The announcement is surprising to us only from a timing perspective … a Rogers and Shaw Communications combination has been a discussion point with investors for a long time. We thought the family was incented to remain independent in the short term given impending wireless spectrum auctions.”
- Tim Casey, BMO Capital Markets
“Question was never if but always when a deal would occur. COVID has proven to be a great accelerator, but we're still surprised to see this deal come in 2021, let alone ahead of the conclusion of the CRTC's Wireless Review and 3500 MHz spectrum auction starting mid-June.”
“Rogers wants to get this deal done and appears prepared to address any remedies potentially sought by regulators (partial divestitures per BCE/MTS), let alone an outright sale of Shaw wireless.”
- Adam Shine, National Bank Financial
“This transaction likely faces regulatory hurdles given that Shaw’s wireless brands have largely been considered instigators of price competition over the last five years … Recall that when BCE acquired MTS in 2016, the company was forced to divest a portion of its subscriber base to TELUS and Xplornet.”
- Aravinda Galappatthige, Canaccord Genuity Capital Markets
“We think wireless consolidation is good news for the wireless incumbents. We believe the transaction, as it is structured without any wireless concessions, is a positive for the wireless industry as it consolidates the number of wireless operators in Ontario, B.C. and Alberta from four to three. Even with divestitures, the ‘new fourth’ may not pose any incremental threat.”
- Jeff Fan, Scotiabank Global Banking and Markets