Shaw buys Canwest TV business for C$2bn
The Canadian cable and broadcast giant Shaw Communications has made a C$2bn bid to acquire the entirety of media group Canwest Global Communications’ television business.
The deal comprises the payment of C$1.2bn for the various Canwest broadcast units…
The Canadian cable and broadcast giant Shaw Communications has made a C$2bn bid to acquire the entirety of media group Canwest Global Communications’ television business.
The deal comprises the payment of C$1.2bn for the various Canwest broadcast units and the indirect assumption of C$815m debt at CW Media Group, a Canwest subsidiary that owns the specialty channels bought from Alliance Atlantis Communications in 2007.
Of the C$1.2bn, C$700m will be paid to affiliates of Goldman Sachs for their equity stake in CW Media Group. Shaw will also pay C$478m to unsecured Canwest creditors. Canwest filed for creditor protection for the television assets in October 2009.
Shaw made the outright acquisition bid after months of negotiations with Goldman Sachs over a C$94m deal for a 20% stake in a restructured Canwest that would have been supplemented by 80% of the entity’s voting shares.
Goldman Sachs and its affiliates blocked the deal, as they felt it did not represent full compensation for the value of their shareholding.
Goldman Sachs acquired its equity stake in CW Media Group through its work in aiding the acquisition of the channels from Alliance Atlantis in a deal worth more than C$2.3bn.
These negotiations have caused Shaw to move for the much more costly direct acquisition of the Canwest TV business, as it wishes to integrate the group without dealing with financial partners.
Shaw will finance the acquisition through its cash in hand, which totals more than C$700m, and an existing credit facility.
TD Securities acted as financial advisor to Shaw. Davies Ward Phillips & Vineberg LLP provided legal advice.
Shaw CFO Steve Wilson said that the purchase represented a multiple of 9.5 x EBITDA. Moody’s stated that the deal did not affect Shaw’s current ratings or outlook.
Shaw’s primary business is in cable, internet and satellite broadcast provision. The specialty Canwest TV assets it has acquired include HGTV, Showcase, the Food Network, domestic news and repackaged US programming.
With this move, Shaw is making a high stakes gamble in the hope that it can use the Canwest TV channels as a major selling point for new wireless networks that it plans to roll out in 2011.
Shaw is betting that the Canwest content will be the differentiator that attracts consumers to sign up to its wireless service rather than its competitors. It will also seek to take advantage of more traditional IPTV cable distribution.
Shaw Communications CEO Jim Shaw said: “The recent restructuring initiatives undertaken by Canwest have positioned it as a pure play Canadian broadcaster and we are excited about this transformative transaction for Shaw as we believe the combination of content with our cable and satellite distribution network, and soon to be wireless service, will position us to be one of the leading entertainment and communications companies in Canada.”
