Corus Entertainment Overpaying For Shaw Media, Says Private Equity Firm

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TORONTO — Catalyst Capital Group Inc. is calling on Corus Entertainment Inc. (TSX:CJR.B) to renegotiate its $2.65-billion deal for Shaw Media Inc., arguing that it is overpaying for the assets.

The private equity firm, a minority shareholder in Corus, wants a March 9 vote on the deal to be postponed to allow more time for a review.

To reduce the price being paid, Catalyst suggested issuing fewer shares or paying a special dividend to existing shareholders.

Catalyst is also calling changes to the financing arrangement related to the sale and an evaluation of a potential sale of Corus itself.

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The sale of Shaw Media to Toronto-based Corus was announced in January 2016. (Photo: The Canadian Press)

Corus signed an agreement in January to buy the media division of Shaw Communications, which would add the Global Television network and 19 specialty channels to its portfolio.

In a statement in response to Catalyst issued after markets closed, Corus said among other things that the purchase price was at "the midpoint of the fair market value range" as determined by Barclays Capital Canada.

It also rejected the Catalyst argument that it was overpaying for Shaw Media because the multiple is higher than what it received when Corus exited the Pay TV business in a deal with Bell Media, saying they were not comparable transactions for a number of reasons, including the fact that it was not the sale of an ongoing business concern.

As well, it noted that Bell Media did not acquire any subscribers or affiliation agreements from Corus, or the programming on Movie Central or Encore Avenue or any other leases, contracts or any other assets relating to the two.

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The purchase of Shaw Media requires the approval of Corus shareholders. (Photo: The Canadian Press)

As well, HBO's agreement with Bell Media was expected to result in a significant decline in the future profitability of Corus' Pay TV service, it said.

The purchase of Shaw Media requires approval by a majority of Corus shareholders, excluding the Shaw family.

Proxy advisory firms Glass Lewis and Institutional Share Services have recommended shareholders vote in favour of the deal, Corus has said previously.

Shaw Communications will become a large shareholder in Corus as a result of the deal, which involves both cash and shares. Both Corus, which was spun off from Shaw in 1999, and Shaw Communications, are controlled by the Shaw family.

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