Shares of cable and wireless telecommunications company Shaw Communications (SJR) surged on Monday. The stock rose as much as 46%. As of 2:45 p.m. EDT, however, the stock was up 38%.
The stock soared on news that telecommunications specialist Rogers Communications (RCI 0.36%) agreed to acquire all outstanding shares of Shaw as part of a merger.
Rogers agreed to "acquire all issued and outstanding Class A Shares and Class B Shares of Shaw for a price of $40.50 per share in cash, amounting to approximately $20 billion, which reflects a premium of approximately 70% to Shaw's recent Class B Share price," the companies said in a press release on Monday.
Inclusive of $6 billion of Shaw debt, the transaction is valued at about $26 billion.
The two telecom companies expect synergies from the merger to exceed $1 billion annually following two years of operations after the deal closes. In addition, Shaw and Rogers believe the deal will "be significantly accretive to earnings and cash flow per share as of the first year after closing."
Following the transaction, the Shaw family will be one of the largest shareholders of the combined company. Two Shaw family members, including Brad Shaw, will join the combined company's board of directors.
The deal is expected to close in the first half of 2022. But it is subject to customary closing conditions and regulatory approval.