News: Canada’s Rogers to buy rival Shaw Communications for C$20 billion.
(Reuters) – Rogers Communications Inc announced Monday that it has agreed to buy rival Shaw Communications Inc for about $ 20 billion to create Canada’s second largest cellular operator, but it is likely to face tight government scrutiny .
With the takeover of fourth-placed Shaw, Rogers would overtake Telus Corp, the current second largest operator, and take over market leader BCE Inc.
Shaw shareholders will receive $ 40.50 per share, a premium of nearly 70% through Friday’s close of trading. The deal is valued at $ 26 billion, including debt.
The deal is under review by the Canadian Independent Competition Bureau, the Canadian Radio, Television and Telecommunications Commission (CRTC) and the Department of Innovation, Science and Economic Development (ISED).
Canadian Innovation Minister Francois-Philippe Champagne said the review will focus on “affordability, competition and innovation”.
Toronto-based Rogers said that after acquiring Calgary-based Shaw, $ 2.5 billion will be spent over the next five years to expand 5G networks in western Canada.
“It is really too early to speculate on the overall regulatory outcome,” said Joseph Natale, Rogers’ chief executive officer, on a conference call. “However, we are confident that this transaction will be approved.”
Amid potential doubts about the deal, Shaw Communications’ US-listed shares rose 57% to $ 30.30 in premarket trading on Monday.
The deal brings together two of the largest family-run telecommunications companies in the country and generates annual sales of $ 19 billion. BCE had sales of $ 22.9 billion last year, while Telus had sales of $ 15 billion.
($ 1 = 1.2456 Canadian dollars)
Reporting by Eva Mathews in Bengaluru and David Ljunggren; Adaptation by Shailesh Kuber and Anil D’Silva
Original Source © Reuters