Canada’s Rogers snaps up rival Shaw in $16B deal

Two of Canada’s top telecom providers are merging. Rogers Communications announced plans to acquire rival Shaw Communications for approximately $16 billion (C$26B). As part of the deal, Rogers will acquire all shares of Shaw amounting to approximately $16 billion plus $4.8 billion in Shaw debt.

Rogers said it has secured financing to cover the cash portion of the deal. About 60 percent of the Shaw family shares will be exchanged for 23.6 million Rogers B-class shares. The Shaw family will become one of the largest Rogers shareholders and Brad Shaw and another director nominated by the Shaw family will be named to the Rogers’ board of directors.

Leapfrog to No. 2

By acquiring fourth-ranked Shaw, Rogers would jump past the No. 2 Canadian provider Telus Communications, and take on BCE, which is the market leader in the country.

The deal will first face intensive regulatory review by the Independent Competition Bureau of Canada, the Canadian Radio-television and Telecommunications Commission and the Department of Innovation, Science, and Economic Development. If approved, it is expected to close in the first half of 2022.

While much of the deal is focused on the combined company’s wireless holdings and how the venture might accelerate Canada’s 5G rollout, the wireline component of the merger is more straight-forward. Shaw and Rogers both have cable and internet businesses but they don’t have much overlapping territory.

At the end of 2020, Rogers reported that it had 4.6 homes passed in its cable footprint across Ontario, New Brunswick and Newfoundland. The company said it had a 55% penetration rate and a customer base of 2.6 million for its Ignite internet service. Rogers currently offers Ignite Gigabit service across its entire cable footprint and is also deploying fiber-to-the-home in targeted and greenfield areas.

Shaw, meanwhile, reported that a loss of 15,100 consumer internet customers during its fiscal first quarter of 2021 that ended November 30, 2020.  However, Shaw noted that it saw growth in its top internet tier. The company recently launched a Fibre+Gig 1.5 product in early November that was targeted at data-heavy customers.  

Although there weren't specifics on how the wireline and cable assets would be combined, the acquisition does include an $80M fund dedicated to delivering broadband to rural and remote areas. 

Related: Updated: Cogeco rejects Altice USA and Rogers' plan for $8B buyout

Not the first acquisition attempt

Rogers has been intent upon expanding its footprint in Canada. Last year it was involved in a complicated merger in which Altice USA was going to acquire Canadian media and telecom company Cogeco for $8.4 billion (C$11.1B) and retain Cogeco’s U.S. assets (primarily Atlantic Broadband) and then sell the Canadian assets to Rogers. The Cogeco board rejected Altice’s offer even after Rogers tried to sweeten the offer by announcing it would invest C$3B in Quebec’s telecom networks if the deal was successful.