Shaw Buys Cable Rival for C$1.2 Billion
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It's East meet West, Canadian style, as cable giant Shaw Communications announced Thursday its intentions to buy rival Moffat Communications Ltd., for (Canada) $1.2 billion.
The buyout, subject to shareholder and regulatory approval, was inevitable as Shaw continues its cable Internet consolidation throughout Western Canada.
Shaw, the second largest cable Internet provider in Canada, owned cable interests in one half of Winnipeg, Manitoba, while Moffat, Canada's fifth-largest cable provider, owned the other.
Jim Shaw, Shaw Communications president and chief executive officer, said he couldn't be happier with a deal that consolidates his company's presence in Canada's major cities.
Shaw said he intends to send his company's letter of intent to Moffat shareholders in mid-December, and expects their approval in January, 2001. It then goes to the CRTC for government approval.
The consolidation comes as no surprise to many in the Canadian cable industry, who saw the opening round of the buyout last month.
In November, Shaw Communications grabbed more than a million shares of Moffat Communications for a total 14.8 percent ownership stake in the broadcasting company. At today's exchange rate, it would translate to an approximately (Canada) $122 million investment.
Jay Thomson, Canadian Association of Internet Providers president, said his organization most likely won't object to the buyout and expects little resistance by the Canadian Radio-television and Telecommunications Commission,
"The Commission's adopted approach is not to require much from the merging cable companies, as long as all their finances are in order," Thomson said. "It's unlikely they'd try to block it. And since third-party cable Internet access begins early next year, the CAIP most likely won't do anything either."
The CAIP, an organization of 82 telecommunications and Internet service provider companies, has been watching the continued consolidation in the cable market since it started pressuring the government four years ago to open up cable Internet to competitive services.
Randall Moffat, Moffat Communications chairman and president, defended his decision to pass the reins of his family-owned company to another.
"My decision to further the consolidation of the cable television industry was not an easy one to make," Moffat said. "The Moffat family has been involved in the Canadian broadcasting industry for over 50 years. We believe that the combination of Moffat and Shaw will create the clear leader in the communications industry in Western Canada."
Moffat will join Shaw Communications on its board of directors after he tenders the 52 percent ownership held by his holding company.