Corus Entertainment Purchases Nelvana for $554 million

Toronto-based Corus Entertainment Inc., one of Canada’s largest media companies, and children’s TV producer Nelvana Ltd. announced on September 18, 2000, that their respective Boards have unanimously approved the acquisition of Nelvana by Corus in a $540 million cash and stock deal. Corus, who earlier this summer acquired a 6 per cent interest in Nelvana, will now acquire all outstanding Multiple Voting and Subordinate Voting Shares for $48.00 per share, payable by approximately 60 per cent in cash and 40 per cent in Corus class B non-voting shares. Corus will also take on Nelvana’s $75 million debt, pushing its debt load to about $400 million. After the deal closes in November, Nelvana shareholders will control about 11 per cent of Corus’ 42 million class B shares.

The deal positions Corus, the former media unit of Calgary’s Shaw Communications Inc., to pursue international expansion. Corus has interests in 10 specialty channels, including YTV, Treehouse and the Family Channel. Until now, Corus has mainly broadcast other producers’ shows. The deal, which arms Corus with a library of approximately 700 hours of animation and a distribution network spanning 160 countries, will make Corus an integrated producer and distributor of children’s shows. Corus has plans to sell the distribution rights to Nelvana-produced children’s shows, including the popular “Franklin” and “Babar” series’, to other stations, while continuing to collect revenue from books, toys and other products based on the characters of those shows.

Legal advice was provided to Nelvana by Hatty Reisman, Senior Vice-President, General Counsel and Corporate Secretary of Nelvana, with assistance from a team at Osler, Hoskin & Harcourt LLP composed of Jean Fraser, Mark Trachuk and Katy Waugh on corporate and Norm Loveland and Greg Wylie on tax. Corus was advised on corporate matters by Davies, Ward & Beck lawyers Jeff Palmer, Vincent Mercier, Warren Katz, Antonio DiTullio and Mark Hayes. Corus received tax advice from the team of Brian Felesky, Q.C., Vince Bjorndahl and John Bughardt of Felesky Flynn in Calgary. David Fuller and Mike Kray of Fraser Milner Casgrain acted on behalf of Patrick Loubert, the Co-Chief Executive Officer of Nelvana.