Alberta-based Shaw Comms (SJR 22.18, +0.78) trades about 3.7% higher this afternoon given some asset sales and a Canadian spectrum deal which were announced this morning.
SJR announced a share purchase agreement with GI Partners portfolio company Peak 10 Holding Corporation to sell 100% of its wholly-owned subsidiary ViaWest, Inc. for about C$2.3 billion (US$1.675 billion) in a deal expected to close by the end of fiscal 2017. ViaWest provides hybrid IT solutions, including colocation, cloud computing and security and compliance for North American enterprises.
For context, SJR bought Viawest from Oak Hill Capital Partners and other shareholders back in July of 2014. The deal at the time cost SJR about $1.2 billion. Flash forward to today, and the purchase price of about C$2.3 billion (US$1.675 billion), represents an attractive return on SJR’s original investment of US$1.2 billion, or about C$1.3 billion at the prevailing exchange rate at the time. All told, SJR expects to realize net cash proceeds from the transaction of about C$900 million after the repayment of ViaWest level indebtedness of about US$580 million, repayment of the US$380 million Shaw credit facility borrowings associated with the original investment and subsequent INetU acquisition, and estimated transaction expenses and taxes.
Also today, SJR and Quebecor Media Inc. entered an agreement whereby SJR would acquire 700 MHz and 2500 MHz wireless spectrum licenses for $430 million. The spectrum licenses being acquired comprise the 10 MHz licenses of 700 MHz spectrum in each of British Columbia, Alberta, and Southern Ontario, as well as the 20 MHz licenses of 2500 MHz spectrum in each of Vancouver, Edmonton, Calgary, and Toronto. The transaction will be funded using a combination of cash on hand and Shaw's existing credit facility, and is expected to close in the summer of 2017.