TORONTO – Rogers Communications could rake in more than $300 million for selling off The Shopping Channel and is allegedly actively seeking bids on the broadcast retailer.
According to a report from Reuters, Rogers began the sale process six weeks ago and is now in the second round of bids. Liberty Interactive Corporation is one of the bidders, according to a source quoted in the report, while other interested parties could include U.S. home shopping channel operators HSN Inc. and EVINE Live Inc., which runs ShopHQ, as well as private equity firms.
The Shopping Channel is part of Rogers' media division, which also includes Sportsnet and its other TV channels, in addition to its radio stations and publishing brands. The division contributed less than 15% to the company’s total revenue in the first quarter, the report continued.
Reacting to the report, Canaccord Genuity said Monday that a $300M valuation for The Shopping Channel “suggests meaningful upside to our overall valuation of $1.4B for Rogers’ Media division.”
“In our view, the sale of this asset for a valuation in the $300M vicinity makes a lot of sense considering its non-core nature and Rogers’ objective of lowering its balance sheet leverage”, reads a note by research analyst Aravinda Galappatthige. “Rogers’ net debt/LTM EBITDA is currently at 3.2x (excluding investments in Cogeco Cable and Cogeco Inc) versus an objective of 2.5x. With the cash payments for its 50% share of Glentel of $392M (in Q2), the $440M (net) for the acquisition of Mobilicity (Q3) and the additional $100M payment for the Shaw AWS-1 Spectrum, we project little easing in this leverage ratio in the near term. In that context, we believe non-core asset sales clearly make sense. The faster the company can get to a 2.5x leverage ratio, the sooner it can consider options such as share buybacks.”
– Lesley Hunter
