Varcoe: 'We are at an inflection point as a community' as takeover of Shaw hits corporate Calgary – Calgary Herald

Article content

Sometimes it takes decades for the business landscape to evolve.

Today, it feels like the corporate terrain in Calgary and across Alberta is transforming under our feet — and the community will look vastly different coming out of the pandemic than it did 12 months ago.

The $26-billion acquisition Monday of Shaw Communications Inc. by Toronto-based Rogers Communications Inc. puts an exclamation point on the rapid pace of change that’s now unfolding.

An iconic name in Alberta’s business community is being acquired as two Canadian telecom giants join forces.

“We are in a new environment,” says Martin Pelletier, a portfolio manager at Wellington-Altus Private Counsel in Calgary.

“When you have these big events, it has a profound impact on the landscape and there’s a changing out of the leaders and a whole new guard comes in.”

The friendly transaction, which needs shareholder approval, will see Rogers offer $40.50 a share for Shaw stock in a deal worth $20.4 billion and the assumption of $5.8 billion of Shaw’s debt.

Article content

While leaders across Alberta have preached about the merits of economic diversification for decades, Shaw was the embodiment of it happening in the province over the past 50 years.

Founded by JR Shaw, he created Capital Cable Television Co. and signed up his first customer in Sherwood Park in 1971. He began assembling a business empire, changing its name to Shaw Cablesystems in 1983.

Article content

The head office moved to Calgary in 1995 and Shaw Communications eventually expanded into a number of areas, becoming a satellite TV and Internet provider and in 2016, it made a key move into wireless by buying Wind Mobile. (JR Shaw died last year. His son, Brad, has been CEO since 2010.)

The company has 9,500 employees across Canada, including 3,250 in Alberta.

Article content

Brad Shaw, who will join the board of Rogers, pointed out the combined companies will be able to make major investments in 5G networks more quickly and grow the business.

“Western Canada is a big part of their thinking, a big part of their plans,” he said in an interview.

Rogers CEO Joe Natale said the company is making a number of commitments to expand the business in the city and province.

It will create a regional headquarters for its Western Canadian operations at Shaw’s existing downtown offices.

It will spend $2.5 billion building 5G networks in Western Canada in the next five years, and establish a new $1 billion fund to support rural, remote and Indigenous communities being connected to high-speed Internet.

Article content

In Calgary, Rogers will establish a National Centre of Technology and Engineering Excellence, with 500 new jobs in the city that could serve as a platform for even greater growth.

These jobs will include positions related to telecom, software and systems engineers, IT and cybersecurity roles, as well as artificial intelligence research.

“There’s a great diversification here within Calgary, which I think is needed,” added Brad Shaw. “It was really important for our family to make sure that those commitments were there.”

In total, the new network investments and technology positions will create up to 3,000 net new jobs in Western Canada, including 1,800 in Alberta.

“As we look to the future, we want to grow and invest in the West. We know Alberta’s economy is facing some of the most challenging periods ever…It’s not lost on us,” Natale said in an interview.

“Our goal is to have this partnership be about growing the jobs and addressing these challenges.”

Shaw has more than 2,600 employees in Calgary.

Rogers said it expects the acquisition will unlock cost-savings of more than $1 billion annually within two years of the deal closing.

Cost-cutting will inevitably give rise to concerns about corporate job losses, but Rogers’ CEO stressed the deal will lead to more jobs coming to the city.

“It is going to feel, look, walk and talk like a head office because decisions will be made there by senior people,” he added.

The promise to put additional resources and jobs into Western Canada provided comfort to local leaders.

Article content

(The broader question of what it means for consumers, particularly wireless customers, is a matter that will be examined by regulators and the Competition Bureau.)

For Calgary, the Shaw acquisition comes at a time when the city is witnessing economic upheaval and ongoing challenges from COVID-19 and a tough recession.

Oil and gas companies such as Husky Energy and Seven Generations Energy have been taken over recently during a flurry of oilpatch M&A deals. Tourism and travel companies face an uncertain future with the pandemic, while the tech sector is expanding.

“All of these things point to we are at an inflection point as a community, as sectors, as industries — and rapid change will be the new norm,” said Mary Moran, CEO of Calgary Economic Development.

Alberta business leader Dick Haskayne, whose memoir Northern Tigers talked about the importance of building Canadian corporate champions, said it’s hard to overestimate the importance of having head offices in the community.

“It is absolutely critical because that’s where the important decisions are made,” he said.

However, Canada must also create companies that can compete globally, Haskayne said.

Monday’s deal left local leaders with mixed feelings.

Mayor Naheed Nenshi welcomed the additional investment coming into the city. But he’s also eyeing the loss of one of Calgary’s largest corporate head offices while trying to attract other headquarters to fill up vacant downtown office towers.

Article content

“Ultimately our goal has to be jobs and the take-up of space in the downtown core,” he said.

Premier Jason Kenney told reporters he’d rather see the merged head office be based in Calgary, but noted Rogers has pledged to boost its employment in Alberta.

He expects regulators and the Competition Bureau to carefully review the merger and the province will likely make submissions on the transaction. It will likely take nine to 12 months before the regulatory review is done.

As the examination unfolds, what is clear is a marquee Alberta company has been purchased — and while more jobs will be coming, Monday’s deal is another sign of a community, a province and an industry facing a major economic transition.

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com