Shaw Communications (SJR) - Get Shaw Communications Inc. Class B Report skyrocketed Monday after rival Rogers Communications (RCI) - Get Rogers Communications Inc. Class B Report said it would acquire the Canadian telecom in a deal valued at C$26 billion ($21 billion), including C$6 billion in debt.
Shares of the Calgary, Alberta company were surging 54.4% to $29.60 in U.S. premarket trading. Toronto-based Rogers Communications was down slightly to $47.50.
Under the terms of the deal, holders of Shaw Class A Shares and Class B Shares will receive $C40.50 a share in cash, representing a 69% premium over Shaw’s most recent closing price. The acquisition is expected to close in the first half of 2022.
Shaw CEO Brad Shaw and another director nominated by the Shaw family will join the Rogers board.
Rogers said the transaction would add to earnings and cash flow per share in the first year after closing and that cost savings from the deal would top C$1 billion annually within two years
The combined company will invest C$2.5 billion to build 5G networks over the next five years across Western Canada. Rogers said it will not increase wireless prices for Freedom Mobile customers for at least three years following the close of the transaction.
Rogers will establish a C$1 billion fund dedicated to connecting rural, remote and Indigenous communities across Western Canada to high-speed Internet and closing critical connectivity gaps faster for underserved areas.
"Western Canada is a major driver of our national economy and together we will have the scale, expertise and commitment to deliver the technology infrastructure needed to keep local communities connected, businesses competitive and attract new investment,” Joe Natale, president and CEO of Rogers Communications, said in a statement.
Last year, Rogers and Altice USA (ATUS) - Get Altice USA, Inc. Class A Report joined forces to acquire Quebec-based Cogeco and its subsidiary Cogeco Communications Inc. The takeover bid collapsed in November.
Last month, Alphabet's (GOOGL) - Get Alphabet Inc. Class A Report Google said it was teaming up with chipmaker Intel (INTC) - Get Intel Corporation (INTC) Report to help accelerate 5G network transformation for cloud communications service providers.