- Rogers Communications agrees to a CAD $7bn equity investment from Blackstone and major Canadian pension funds.
- The deal aims to reduce debt and highlight the value of Rogers’ wireless infrastructure.
What happened: Strategic investment to strengthen balance sheet
Rogers Communications, one of Canada’s largest telecommunications companies, has secured a CAD $7bn equity investment from Blackstone and a consortium of major Canadian pension funds. The deal is designed to reduce Rogers’ debt and underscore the value of its wireless infrastructure. Based in Toronto, Rogers provides wireless, broadband, and media services across the country.
The company recently expanded its reach with the CAD $20bn acquisition of Shaw Communications. Under the new agreement, Blackstone will acquire a 49.9% non-controlling stake (with 20% voting rights) in a new Rogers subsidiary that will own a portion of its wireless backhaul transport network. Rogers will retain operational control and will consolidate the subsidiary into its financial results. The investor group includes CPP Investments, Caisse de dépôt et placement du Québec, PSP Investments, and British Columbia Investment Management Corporation.
This strategic partnership demonstrates the confidence investors have in Rogers and its world-class assets, said Tony Staffieri, President and CEO of Rogers. The transaction is expected to strengthen the company’s investment-grade balance sheet by reducing borrowings and unlocking the value of critical assets, said Glenn Brandt, CFO of Rogers. The deal gives Blackstone up to CAD $400m in annual distributions over the first five years. Rogers will also have the option to buy back Blackstone’s stake between the eighth and twelfth years after closing. Credit rating agencies, including Moody’s, S&P, and DBRS, are expected to treat the deal as equity. Pending approval, the deal is expected to close later this quarter.
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Why it is important
The CAD $7bn investment in Rogers Communications by Blackstone and a group of major Canadian pension funds is significant for several reasons. Firstly, it aims to reduce Rogers’ debt and highlight the value of its wireless infrastructure, which is crucial in the current competitive telecommunications market. The deal also underscores the confidence investors have in Rogers’ ability to manage and grow its assets. By acquiring a 49.9% non-controlling stake in a new Rogers subsidiary, Blackstone and the investor group will provide significant financial support while allowing Rogers to retain operational control.
This partnership is expected to strengthen Rogers’ balance sheet, reduce leverage, and unlock the value of critical assets. The deal is also notable for its potential impact on Rogers’ long-term financial health and strategic growth. With the option to buy back Blackstone’s stake in the future, Rogers maintains flexibility in its corporate strategy. Credit rating agencies’ expected treatment of the deal as equity further supports Rogers’ financial stability. Overall, this investment is a strategic move that could enhance Rogers’ position in the telecommunications industry and contribute to its ongoing expansion and innovation efforts.
