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Rogers seeks to buy Shaw for $20.4-billion in deal that would transform Canadian telecom market – The Globe and Mail

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A sign is pictured on top of the Rogers Communications Inc. building on the day of their annual general meeting for shareholders in Toronto, April 21, 2015.

Mark Blinch/Reuters

Rogers Communications Inc. plans to acquire Western Canadian rival Shaw Communications Inc. for $20.4-billion in a deal that unites two family dynasties in a nationwide battle for customers against BCE Inc. and Telus Corp.

Shaw chief executive Brad Shaw decided his Calgary-based company could no longer go it alone in an increasingly competitive telecom market and needed to combine forces with Rogers on a planned $6.5-billion network expansion in Western Canada.

“5G and our urban and rural networks are critical to our customers, and we can move more quickly together than either of us could on our own,” he said in an interview with The Globe and Mail.

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Toronto-based Rogers is offering $40.50 per share for Shaw, a 69-per-cent premium to where the Calgary-based company’s stock recently traded. Rogers received an irrevocable commitment to the bid from the Shaw family, which holds 79 per cent of the votes at a business founded by cable entrepreneur JR Shaw, Brad Shaw’s father.

Sale of telecom empire has ‘generational impact’ on Shaw family

The takeover requires shareholder and regulatory approval and is expected to receive intense scrutiny from the federal government as it would eliminate Canada’s fourth-largest wireless player. Both the federal Liberals and Conservatives push the idea of multiple competitors as a way to bring down cellphone bills. In the past, analysts have said if Rogers and Shaw merged, they would need to sell a portion of the wireless business to win over regulators.

Brad Shaw, chief executive officer of Shaw Communications Inc. is photographed at the company headquarters in Calgary on Thursday, November 17 2016.

Chris Bolin Photography Inc/The Globe and Mail

Rogers chief executive Joe Natale said in an interview the two companies plan to tell regulators and politicians that combining their operations will increase efficiency, lower prices and increase connectivity, “bridging the digital divide” between cities and underserved rural and Indigenous customers. “This combination is the right thing for Canada and consumers,” he said.

Rogers and Shaw made a series of commitments to Western Canada in announcing the deal, including a promise to add 3,000 new jobs in Alberta, B.C., Saskatchewan and Manitoba, and to maintain a significant regional head office in Calgary. If successful, Rogers plans to spend $2.5-billion rolling out its 5G network in the four provinces, and set up a $1-billion fund to provide high speed internet to rural, remote and Indigenous communities. The company earmarked an additional $3-billion for upgrading networks in the West.

The seeds for the takeover were sown last summer. Mr. Natale had dinner with Mr. Shaw in Calgary while he was in Alberta to review Rogers’ operations; the two have known each other for years. Over the course of the meal, the two CEOs talked in general terms about joining forces. Mr. Shaw followed up with a phone call to Mr. Natale early this year, and the two agreed on specifics during a recent meeting at a Calgary airport hangar, negotiating across what Shaw’s CEO described as “an appropriate social distance.”

Rogers Communications CEO Joe Natale speaks to shareholders during the Rogers annual general meeting in Toronto on Friday, April 20, 2018.

Nathan Denette/The Canadian Press

Bankers called the transaction “Project Scotch,” with Shaw codenamed “scotch” in all documents, to mask its identity, while Rogers was called “rum.” With Shaw’s debt included, the total value of the acquisition is $26.2-billion, among the largest takeovers ever staged by a Canadian company. The offer values the Shaw family’s stake at $2.3-billion, and they will take 60 per cent of the purchase in Rogers non-voting shares and $920-million in cash, making the clan the second largest shareholder, after the Rogers family. Rogers will fund the acquisition with cash on hand and by borrowing.

Mr. Shaw will join the Rogers board after the deal closes, and the Shaw family will have the right to name a second Rogers director. Combining the two companies is expected to result in $1-billion of annual cost savings for Rogers. If regulators and shareholders sign off, the two companies said the deal is expected to close in the first half of 2022. Rogers is buying Shaw at a multiple of 10.7 times the company’s forecast earnings before interests, taxes, depreciation and amortization, or EBITDA.

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Both Rogers and Shaw were founded in the 1960s and built their businesses by acquiring a series of family-owned cable companies. Both saw their founders pass away relatively recently: Ted Rogers died in 2008 and JR Shaw passed away last March at age 85. The two CEOs said their common experience, and years of rivalry that included numerous practical jokes, paved the way for a friendly takeover.

The Rogers logo is photographed in Toronto on Monday, September 30, 2019.

Tijana Martin/The Canadian Press

Mr. Shaw, who took the reins in 2010, said he had numerous conversations about the future of the company with his late father and his late brother, former CEO Jim Shaw, who died in 2018 at the age of 60. “We constantly discussed where the company is going,” Mr. Shaw said. “Some of those conversations were easier than others.”

In the Shaw offices, difficult conversations were held ahead of Mr. Shaw’s decision to sell the company’s media assets, which included the Global Television Network, to Corus Entertainment in 2016 for $2.65-billion, and his move to sell its data-centre business in 2017 for $2.3-billion. In hindsight, both moves paid off. Shaw used the money it raised to buy and build out its Freedom Mobile Inc. and Shaw Mobile cellphone businesses that are now its fastest growing platforms and attractive assets for Rogers.

Mr. Shaw said his father understood the logic of potentially selling the company. He said the family wants its legacy to be as builders of the leading Canadian telecom platform, and combining forces with Rogers is the best way to achieve that goal. On the other side of the table, Rogers has always coveted a national platform to better compete with BCE. Mr. Natale said that at a Rogers board meeting last week to approve the transaction, long-time director and former chair Alan Horn said, “Somewhere, Ted is smiling, and saying ‘Now, will you just get on with it?’”

Last year, Rogers and U.S. telecom company Altice USA Inc. made an unsuccessful $10.3-billion bid for Quebec-based rival Cogeco Inc. Rogers continues to be the largest single shareholder in Cogeco and subsidiary Cogeco Communications Inc. Mr. Natale said the company’s friendly offer for Shaw has no bearing on its Cogeco investments.

Shaw got its start in the cable industry in Edmonton, and only got into the wireless business in 2016 when it purchased Toronto startup carrier Wind Mobile Corp., now called Freedom Mobile, for $1.6-billion. Since then, Shaw has invested billions in building out its wireless network. Last summer, the company launched a new Shaw Mobile service, available as part of a bundle to its internet customers in Western Canada. The aim was to win back internet subscribers in Alberta and British Columbia from Vancouver-based rival Telus, which has been eating away at Shaw’s market share.

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In negotiating the deal, Rogers hired BofA Securities and Barclays as its financial advisers and Goodmans LLP as law firm. TD Securities and law firm Davies Ward Phillips & Vineberg LLP advised Shaw. Shaw also struck a special committee of its board, which was advised by CIBC World Markets and law firm Burney Duckworth & Palmer LLP. The Shaw family’s trust used Dentons Canada LLP as their lawyers, while Torys LLP advised the Rogers family trust.

With a report from Alexandra Posadzki

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Canadian Business During the Pandemic

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In 2019 the world was hit by the covid 19 pandemic and ever since then people have been suffering in different ways. Usually, economies and businesses have changed the way they work and do business. Most of which are going towards online and automation.

The people most effected by this are the laymen that used to work hard labors to make money for there families. But other then them it has been hard for most business to make such switch. Those of whom got on the online/ e commerce band wagon quickly were out of trouble and into the safe zone but not everyone is mace for the high-speed online world and are thus suffering.

More than 200,000 Canadian businesses could close permanently during the COVID-19 crisis, throwing millions of people out of work as the resurgence of the virus worsens across much of the country, according to new research. You can only imagine how many families these businesses were feeding, not to mention the impact the economy and the GDP is going to bear.

The Canadian Federation of Independent Business said one in six, or about 181,000, Canadian small business owners are now seriously contemplating shutting down. The latest figures, based on a survey of its members done between Jan. 12 and 16, come on top of 58,000 businesses that became inactive in 2020.

An estimate by the CFIB last summer said one in seven or 158,000 businesses were at risk of going under as a result of the pandemic. Based on the organization’s updated forecast, more than 2.4 million people could be out of work. A staggering 20 per cent of private sector jobs.

Simon Gaudreault, CFIB’s senior director of national research, said it was an alarming increase in the number of businesses that are considering closing.

We are not headed in the right direction, and each week that passes without improvement on the business front pushes more owners to make that final decision,”

He said in a statement.

The more businesses that disappear, the more jobs we will lose, and the harder it will be for the economy to recover.

In total, one in five businesses are at risk of permanent closure by the end of the pandemic, the organization said.

The new sad research shows that this year has been horrible for the Canadian businesses.

 

The beginning of 2021 feels more like the fifth quarter of 2020 than a new year,” said Laura Jones, executive vice-president of the CFIB, in a statement.

She called on governments to help small businesses “replace subsidies with sales” by introducing safe pathways to reopen to businesses.

There’s a lot at stake now from jobs, to tax revenue to support for local soccer teams,”

Jones said.

Let’s make 2021 the year we help small business survive and then get back to thriving.”

The whole world has suffered a lot from the pandemic and the Canadian economy has been no stranger to it. We can only pray that the world gets rid of this pandemic quickly and everything become as it used to be. Although I think it is about time, we start setting new norms.

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Shopify shares edge up after falling on executive departures

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By Chavi Mehta

(Reuters) -Shopify Inc shares edged higher on Thursday, recovering partially from the previous day’s fall, with analysts saying the news of planned senior executive departures may have limited impact due to the company’s deep talent pool.

Chief Executive Officer Tobi Lutke said in a blog post on Wednesday the company’s chief talent officer, chief legal officer and chief technology officer will all leave their roles.

“We remain confident it (Shopify) can continue to execute at a high level, despite the departures,” Tom Forte, analyst at D.A. Davidson & Co said, pointing to the company’s “deep bench of talented executives.”

Shopify, which provides infrastructure for online stores, has seen its valuation soar in the past year as many businesses went virtual during the COVID-19 lockdowns, turning it into Canada‘s most valuable company.

Shopify declined to comment further on Lutke’s statement suggesting current company leaders would step in to fill the three roles. After chief product officer Craig Miller left in September, Lutke took on the role in addition to CEO.

The Ottawa-based company is Canada‘s biggest homegrown tech success story, founded in 2006 and supporting over 1 million businesses globally, according to the company.

Jonathan Kees, analyst at Summit Insights Group, called the timing of the departures “a little alarming” but said the specific roles make it less concerning, given that the executives leaving are “more back-office roles.”

Lutke said each one of them had their individual reasons to leave, without giving details.

“I am willing to give Tobi’s explanation the benefit of the doubt,” Kees added.

Toronto-listed shares of Shopify were up 3.5% at C$1526.41 on Thursday, giving it a market value of C$188 billion ($150 billion). It ended down 5.1% on Wednesday.

“While we would refer to the departure of three high-level executives as ‘significant,’ we would not refer to it as a ‘brain drain,'” Forte added.

($1 = 1.2541 Canadian dollars)

(Reporting by Subrat Patnaik in Bengaluru; additional reporting by Moira Warburton in Vancouver; Editing by Sherry Jacob-Phillips and Dan Grebler)

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Almost half of Shopify’s top execs to depart company: CEO

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By Moira Warburton

(Reuters) – Three of e-commerce platform Shopify’s seven top executives will be leaving the company in the coming months, chief executive officer and founder of Canada‘s most valuable company Tobi Lutke said in a blog post on Wednesday.

The company’s chief talent officer, chief legal officer and chief technology officer will all transition out of their roles, Lutke said, adding that they have been “spectacular and deserve to take a bow.”

“Each one of them has their individual reasons but what was unanimous with all three was that this was the best for them and the best for Shopify,” he said.

The trio follow the departure of Craig Miller, chief product officer, in September. Lutke took on the role in addition to CEO.

Shopify, which provides infrastructure for online stores, has seen its valuation soar in the last year as many businesses went virtual during COVID-19 lockdowns. It has a market cap valuation of C$182.7 billion ($146 billion), above Canada‘s top lender Royal Bank of Canada.

It is Canada‘s biggest homegrown tech success story, founded in 2006 and supporting over 1 million businesses globally, according to the company.

“We have a phenomenally strong bench of leaders who will now step up into larger roles,” Lutke said, but did not name replacements.

Shopify said in February revenue growth would slow this year as vaccine rollouts encourage people to return to stores and warned it does not expect 2020’s near doubling of gross merchandise volume, an industry metric to measure transaction volumes, to repeat this year.

Chief talent officer, Brittany Forsyth, was the 22nd employee hired at Shopify and has been with the company for 11 years. She said on Twitter that post-Shopify she would be focusing on Backbone Angels, an all-female collective of angel investors she co-founded in March.

Shopify shares fell 5.1% while the benchmark Canadian share index ended marginally down.

($1 = 1.2515 Canadian dollars)

 

(Reporting by Moira Warburton in Toronto; Editing by Aurora Ellis)

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