{"id":42075,"date":"2021-03-17T10:57:53","date_gmt":"2021-03-17T15:57:53","guid":{"rendered":"http:\/\/prefblog.com\/?p=42075"},"modified":"2021-03-17T10:57:53","modified_gmt":"2021-03-17T15:57:53","slug":"rci-bids-for-sjr","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=42075","title":{"rendered":"RCI Bids For SJR"},"content":{"rendered":"<p>Rogers Communications Inc. and Shaw Communications Inc. <a href=\"https:\/\/about.rogers.com\/news-ideas\/rogers-and-shaw-to-come-together-in-26-billion-transaction-creating-new-jobs-and-investment-in-western-canada-and-accelerating-canadas-5g-rollout\/\">have announced<\/a>:<\/p>\n<blockquote>\n<ul>\n<li>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\u2019s recent Class B Share price\n<li>\nTransaction 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<\/p>\n<li>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\n<li>The transaction is not conditional upon financing, as Rogers has secured committed financing to cover the cash consideration\n<li>Pro forma leverage on closing is expected to be just over 5x and Rogers expects to maintain its investment grade rating<\/blockquote>\n<p>Alexandra Posadzki <a href=\"https:\/\/www.theglobeandmail.com\/business\/article-rogers-shaw-could-be-forced-to-divest-wireless-assets-in-deal-expected\/\">comments in the Globe<\/a>:<\/p>\n<blockquote><p>Rogers Communications Inc. (RCI-B-T +5.65% increase) may have to sell off some wireless assets to get its $20.4-billion bid for Shaw Communications Inc. (SJR-B-T +2.51%increase) past a government that has been pushing to increase wireless competition and reduce cellphone bills, analysts say.<\/p>\n<p>The deal announced on Monday is likely to face significant regulatory hurdles, analysts said, because it would eliminate Canada\u2019s fourth-largest wireless carrier, Shaw-owned Freedom Mobile. The regional carrier \u2013 which operates in Ontario, Alberta and British Columbia \u2013 has been credited with driving price competition in recent years.<\/p><\/blockquote>\n<p>She <a href=\"https:\/\/www.theglobeandmail.com\/business\/article-rogers-deal-complicates-shaws-place-at-5g-airwaves-auction\/\">commented later<\/a>:<\/p>\n<blockquote><p>The announcement comes three weeks ahead of the April 6 deadline for telecoms to pay their deposits if they wish to participate in the June auction for airwaves critical for 5G. Experts say the deal raises questions about Shaw\u2019s ability to bid on licenses for the 3,500-megahertz spectrum \u2013 airwaves used to transmit wireless signals.<\/p>\n<p>\u201cBased on a reading of the auction rules, there is a non-negligible possibility that the announced merger may jeopardize Shaw\u2019s participation as a stand-alone entity in the upcoming spectrum auction,\u201d Johanne Lemay, co-president of telecom consultancy Lemay-Yates Associates Inc., said in an e-mail.<\/p>\n<p>The 3,500-MHz band is a key one for the delivery of fifth-generation wireless services because it can carry large volumes of data over long distances.<\/p>\n<p>\u201cSitting out this auction could make or break a company,\u201d said Gregory Taylor, a spectrum expert and associate professor at the University of Calgary. \u201cIf Shaw were out of this auction and then somehow the deal does not go through, Shaw is in big trouble.\u201d<\/p><\/blockquote>\n<p>DBRS <a href=\"https:\/\/www.dbrsmorningstar.com\/research\/375355\/dbrs-morningstar-places-shaw-communications-inc-s-ratings-under-review-with-developing-implications-following-announcement-of-potential-acquisition-by-rogers-communications-inc\">has placed Shaw under Review-Developing<\/a>:<\/p>\n<blockquote><p>DBRS Limited (DBRS Morningstar) placed all ratings of Shaw Communications Inc. (Shaw or the Company) Under Review with Developing Implications following the announcement of an agreement to combine Shaw with Rogers Communications Inc. (Rogers; rated BBB (high) and Under Review with Negative Implications by DBRS Morningstar) in a $26 billion transaction (including the assumption of approximately $6 billion of Shaw\u2019s debt; the Transaction). The closing of the Transaction is subject to a series of approvals including regulatory considerations and is expected to close by the first half of 2022.<br \/><b>&#8230;<\/b><br \/>The status of Under Review with Developing Implications reflects Rogers\u2019 potential assumption of approximately $6 billion of Shaw\u2019s debt should the Transaction close according to terms substantially similar to those proposed. DBRS Morningstar expects Shaw\u2019s debt will effectively rank pari passu with Rogers\u2019 existing senior unsecured indebtedness.<\/p>\n<p>DBRS Morningstar will proceed with its review as more information becomes available and aims to resolve the Under Review status by the closing of the Transaction.<\/p><\/blockquote>\n<p>&#8230; and placed <a href=\"https:\/\/www.dbrsmorningstar.com\/research\/375351\/dbrs-morningstar-places-rogers-communications-inc-s-ratings-under-review-with-negative-implications-following-announcement-of-potential-acquisition-of-shaw-communications-inc\">Rogers under Review-Negative<\/a>:<\/p>\n<blockquote><p>DBRS Limited (DBRS Morningstar) placed all ratings of Rogers Communications Inc. (Rogers or the Company) Under Review with Negative Implications following the Company\u2019s announcement of an agreement to combine Rogers with Shaw Communications Inc. (Shaw; rated BBB and Under Review with Developing Implications by DBRS Morningstar) in a $26 billion transaction (including the assumption of approximately $6 billion of Shaw\u2019s debt; the Transaction). The closing of the Transaction is subject to a series of approvals including regulatory considerations and is expected to close by the first half of 2022.<br \/><b>&#8230;<\/b><br \/>DBRS Morningstar notes that under the Arrangement Agreement, Rogers has the right to cause Shaw to redeem the Company\u2019s outstanding preferred shares on June 30, 2021 (valued at $293 million as of Q4 F2020) in accordance with its terms by providing written notice to Shaw. As of the date of this press release, Rogers has not exercised this right.<br \/><b>&#8230;<\/b><br \/>The Under Review with Negative Implications status reflects DBRS Morningstar\u2019s view that while Rogers\u2019 business profile should benefit from increased scale, an enlarged geographic footprint, and enhanced spectrum license portfolio and potential cost synergies, the benefits do not completely offset the risks associated with the initial increase in financial leverage as lease-adjusted debt-to-EBITDA may increase above 5.0 times on an unadjusted basis and assuming leveraged acquisition.<\/p>\n<p>In its review, DBRS Morningstar will focus on (1) assessing the business risk profile of the combined entity as well as the risks associated with integration and realization of synergy potential; (2) Rogers\u2019 financial risk profile on a pro forma basis, including free cash flow-generating capacity of the combined entity; and (3) the Company\u2019s longer-term business strategy and financial management intentions going forward.<\/p><\/blockquote>\n<p>Affected issues are SJR.PR.A and SJR.PR.B<\/p>\n<p>Standard &#038; Poor&#8217;s <a href=\"https:\/\/www.standardandpoors.com\/en_US\/web\/guest\/article\/-\/view\/type\/HTML\/id\/2611180\">comments<\/a>:<\/p>\n<blockquote>\n<ul>\n<li>On March 15, 2021, Canadian cable and national wireless operator Rogers Communications Inc. (RCI) announced that it had agreed to acquire Canadian cable operator Shaw Communications Inc. for about C$26 billion. We expect initial leverage to be above 5x&#8211;almost two categories higher than RCI&#8217;s current leverage.\n<li>We predict long-term benefits for RCI, in terms of its pro forma scale and market share, reflecting the combined national network(s) and spectrum position for 5G wireless.\n<li>However, integration and transition risks, potential restructuring costs, and spectrum investments could result in subdued discretionary free operating cash flow and materially higher leverage in the first couple of years after closing.\n<li>Therefore, S&#038;P Global Ratings placed its &#8216;BBB+&#8217; long-term and &#8216;A-2&#8217; short-term ratings on RCI on CreditWatch with negative implications.\n<li>The CreditWatch placement indicates the risk of an up to two-notch downgrade of RCI.<\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Rogers Communications Inc. and Shaw Communications Inc. have announced: 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 &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-42075","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/42075","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42075"}],"version-history":[{"count":0,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/42075\/revisions"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42075"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42075"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42075"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}