Shaw Communications has agreed to sell its Shaw Media operations to Corus Entertainment for CAD 2.65 billion in cash and shares. At completion, Shaw will own 39 percent of Corus. The deal will bring Shaw net proceeds of around CAD 1.8 billion, money which will be used to fund the previously announced acquisition of Wind Mobile for CAD 1.6 billion. This transaction is expected to close in the third quarter.
Shaw Media is made up of conventional television network Global Television and 19 specialty channels, including HGTV Canada, Food Network Canada, History Television and Showcase.
After the Shaw Media sale to Corus closes, Shaw will receive around CAD 1.85 billion in cash and 71 million Corus Class B non-voting shares at CAD 11.21 per share. Shaw has agreed not to sell Corus shares for a certain period of time and to participate in the dividend reinvestment plan of Corus (DRIP) until end August 2017.
The deal will position Shaw as a leading pure-play connectivity company with a strong growth profile, Shaw CEO Brad Shaw said. The company will now focus on delivering consumer and small business broadband communications supported by its wireline, Wi-Fi and wireless infrastructure. Shaw's stake in Corus will allow Shaw shareholders to participate in the upside potential resulting from the deal.
The combination is expected to create a powerful integrated media and content company with increased scale, a strong mix of media properties, meaningful synergies and best-in-class management well positioned to succeed in the new regulatory environment.
The transaction has been approved by Shaw’s board of directors and is not subject to any financing condition. It still waits for approval by Corus shareholders and for other regulatory approvals. It is expected to close in the third quarter.
At completion, Shaw will have the right to nominate three directors to the Corus board of directors, including one Shaw nominee to the Corus executive committee and any Corus Special Committee. Shaw will retain its existing interest in shomi, the subscription based, streaming video on demand service launched last year in partnership with Rogers Communications.
Looking forward, Shaw believes that the enhanced growth profile will strengthen its long term free cash flow position and ability to grow its dividend. In the near term, Shaw's board of directors confirmed the current annual dividend rates of CAD 1.185 on Class B Non-Voting Shares and CAD 1.1825 on Class A Voting Shares.
