CALGARY – Shaw Communications is selling off its stake in Corus Entertainment in a deal valued at approximately $548 million.
The transaction sees Shaw divest its 80.63 million class B non-voting participating Corus shares for $6.80 per share through a secondary offering. That’s about 16% lower than Tuesday’s close on the Toronto Stock Exchange.
Shaw said that it will use the proceeds for general corporate purposes, which may include the repayment of outstanding debt, and that Corus will not receive any money from the sale.
Following the closing of the deal, which is expected on May 31st, Shaw will no longer hold an equity interest in Corus. It will, however, retain control over the broadcaster through its majority ownership of class A (voting) shares.
Canaccord Genuity analyst Aravinda Galappatthige said that the deal was “prudent” given Shaw’s goal to grow the capacity and coverage of its network, the upcoming 3.5GHz spectrum auction, and the potential rollout of a new company-branded wireless product.
“In our view, this transaction is a positive for Shaw given the capital that will be required to expand its wireless network and acquire high-band spectrum in preparation for 5G,” Galappatthige wrote in a note to investors. “We note that this transaction more than offsets the company’s $492M spend in the 600MHz auction and leads to a net debt/EBITDA ratio of 2.0x.”
