Rogers wants to acquire Shaw Communications for about £11.52 billion

Rogers Communications Inc (TSE: RCI-B) said on Monday that it will buy Shaw Communications Inc (TSE: SJR-B) for roughly £11.52 billion. The combined company will secure the number two spot on the list of Canada’s largest cellular operators. The acquisition, however, is subject to strict regulatory scrutiny.  

Rogers Communications shares that you can conveniently trade online via a list of user-friendly trading apps were reported about 2% up in premarket trading and gained another 5% on market open. Including the price action, the stock is now exchanging hands at £36.62 per share after recovering from a low of £27.23 per share in the last week of March 2020, when the COVID-19 crisis was at its peak.

The deal is valued at £18.65 billion including debt

BCE Inc. currently leads Canada’s communications industry, followed by Telus Corp. at the second spot. Acquiring Shaw, which is ranked number fourth at the moment, Rogers will replace Telus as Canada’s 2^nd largest cellular operator.

The £18.65 billion deal (including debt) translates to £23.33 per share for Shaw shareholders – an about 70% premium on the per-share price at which the stock closed on Friday. The acquisition will be reviewed by CRTC (Canadian Radio-television and Telecommunications Commission) and ISED (Department of Innovation, Science, and Economic Development).

The review, as per the country’s innovation minister, Francois-Philippe Champagne, will focus on innovation, competition, and affordability.

Upon completion of the acquisition, Rogers added on Monday, it will expand its investment by £1.79 billion in Western Canada to ramp up 5G networks over the next five years. In separate news from North American, Ford Motor said it will recall 2.9 million vehicles to investigate complaints of potentially faulty driver-side airbags.

CEO Joseph Natale’s comments on Monday

Chief Executive Joseph Natale of Rogers Communications commented on the news on Monday and said:

“It’s really too early to speculate on the regulatory outcome overall. But we feel confident this transaction will be approved.”

The two companies collectively generate £10.94 billion in annual revenue, compared to BCE’s £13.19 billion last year. The news comes on the same day when Swiss pharmaceutical’s manufacturer, Roche Holding expressed plans of buying U.S. based GenMark Diagnostics for £1.29 billion.

Shaw Communications shares jumped roughly 40% in premarket trading on Monday. The stock is now trading at a per-share price of £19.29 versus a much lower £12.92 per share at the start of 2021.