TORONTO – An independent proxy advisory research firm is recommending that Corus Entertainment shareholders vote in favour of the company's proposed $2.65 billion acquisition of Shaw Media Inc.
Institutional Shareholder Services (ISS) offered the recommendation in a report released Monday. The special meeting of Corus shareholders will take place March 9 at Corus Quay, and holders of Class A participating shares and Class B non-voting participating shares as of the record date of February 5, 2016 are entitled to vote.
"… the strategic rationale behind the transaction appears appealing as the combined company is expected to command 34.5% of Canada's English language television audience, while significantly increasing its financial scale, representing a combined $1.9 billion in revenue, $619 million in adjusted EBITDA and $431 million in free cash flow based on the fiscal 2015 results of both companies”, reads the report. “The acquisition will be earnings and free cash flow per share accretive from the outset. The transaction is expected to generate $40-$50 million of annual cost synergies to be realized within 24 months, in addition to revenue synergies. Corus intends to maintain its current annualized dividend of $1.14 per Class B Share. The offer consideration to be paid by Corus to Shaw appears fair for both parties as it is at the mid-point of the valuation range according to the Barclays Valuation and Fairness Opinion. On balance, as the benefits of the transaction appear to reasonably outweigh the costs, a vote FOR this resolution is warranted."
Corus entered into a share purchase agreement with Shaw Communications Inc. on January 13, 2016 to acquire Shaw Media for $2.65 billion, to be paid with a combination of cash and the issuance of Class B shares to Shaw.
"We are pleased that ISS supports our Board of Directors' recommendation that shareholders vote for the acquisition, which underscores our strong belief that this transaction represents a transformational opportunity to create a powerful, integrated media and content company," said Corus president and CEO Doug Murphy, in a statement Monday. "This game-changing acquisition will provide Corus with the scale and scope to compete and grow both domestically and in international markets. The combined companies' leading brands, assets and content position the new Corus to generate long-term value for shareholders while being immediately accretive on an earnings-per-share and cash-flow-per-share basis."
