In a move destined to reshape the face of the communications industry in Canada, Rogers Communications Inc. (Rogers) announced on February 7, 2000 that it will acquire Montreal-based Groupe Vidéotron Ltée (Vidéotron) in a $5.6 billion share swap. Under the scheme, each Vidéotron share will be traded for 0.925 of a non-voting class B share of Rogers. The new entity will be the largest cable provider in Canada, and the seventh- largest in North America, with access to nearly half of Canada’s eight million cable subscribers and a market capitalisation of over $17 billion.
In the race to develop bundled Internet, information and entertainment services in Canada, the transaction follows the movement towards consolidation in the US markets and will give the new company the market presence necessary to take on both domestic and global communications heavyweights, in particular Rogers’ direct competitor in Canada, BCE Inc.
After the merger is completed, Rogers intends to sell any of the new company’s non-core assets, which include Rogers’ $2 billion shareholding in AT&T Canada Inc., and Vidéotron’s 10 per cent stake in wireless provider Microcell Telecommunications Inc.
An interesting aspect of the merger agreement is that Rogers agreed to exclude Quebec’s popular French-language television network, TVA Group Inc. from the transaction. Instead, Vidéotron’s 81 per cent equity stake in TVA will be distributed to shareholders prior to the acquisition, in an effort to maintain ownership of the cultural icon within Quebec.
Acting for Groupe Vidéotron on the deal is a team from McCarthy Tétrault’s Montreal Office led by Warren M. Goodman, Benjamin H. Silver and Daniel Bénay. Rogers is being represented by a team from Torys comprised of James E. A. Turner, John W. McIninch, Brian A. Davis, John C. Sheedy, Michael C. J. Padfield, Emil P. Pellicer, Suh W. Kim, Stephen R. Richardson and James W. Welkoff.