Rogers Communications Inc. RCI-B-T paying $20-billion to buy Shaw Communications Inc. SJR-B-T is among the largest ever made-in-Canada corporate takeovers, but the windfall for the many bankers, lawyers and other professionals who advised on the deal is even more historic.
When the transaction was first announced more than two years ago, Rogers estimated in regulatory filings at the time that total fees – including everything from charges for financial advisers, lawyers, accountants and proxy solicitors to printing and mailing costs – would be roughly $100-million.
And that was before racking up tens of millions of dollars in legal fees fending off regulatory opposition and paying lenders hundreds of millions of dollars to extend the deadline for the deal to get done.
Just resolving the legal dispute with the federal Competition Bureau generated more than $30-million in legal fees, according to regulatory submissions.
Rogers declined to comment on how much the company ultimately expected to pay in total. However, public records show the amount will be substantial simply because of the sheer number of advisers involved and the complexity of the transaction itself.
Bank of America Corp., for example, served as a financial adviser to Rogers since the proposal was first announced in March, 2021 and, at the same time, provided the company with a $19-billion bridge. That money represented one of the largest bridge loans in Canadian history.
One year later, when Rogers replaced that loan with proceeds from U.S. and Canadian bond sales totalling US$7.05-billion and $4.25-billion, respectively, BofA was joined by Citigroup Inc., JPMorgan Chase & Co. and Royal Bank of Canada in managing that debt offering. Rogers also committed to a $6-billion term loan from an unnamed group of banks.
In August, 2022, the company paid its lenders $557-million to extend the deadline on those bonds, according to its latest annual report. When the deal had still not closed by the end of last year, Rogers was required to pay its lenders another $262-million.
Another aspect of this deal that made it especially lucrative to Bay Street is the fact that both buyer and seller are Canadian, meaning the vast majority of fees were paid to domestic advisers. According to data from the Institute for Mergers, Acquisitions and Alliances, Rogers buying Shaw counts as the second-most-valuable instance of one Canadian company buying another since Suncor Energy Inc. acquired Petro-Canada in 2009.
Suncor, in its pursuit of Petro-Canada, also managed to avoid many of the lengthy delays and regulatory battles that plagued the Rogers-Shaw transaction.
Then there was the Rogers family feud that erupted just a few months after the Shaw acquisition was first proposed, pitting Edward Rogers, the only son of company founder Ted Rogers, against his mother and two of his sisters.
Ken McEwan, founding partner of McEwan Partners LLP, represented Mr. Rogers in the dramatic legal battle that ended in November, 2021, when the Supreme Court of British Columbia reaffirmed his authority to overhaul the company’s board of directors.
Mr. Rogers also retained crisis communications firm Navigator Ltd. throughout the dispute and Walied Soliman, chair of Norton Rose Fulbright Canada LLP, was hired by his sister – Melinda Rogers-Hixon – to oppose him.
Beyond fees paid by Rogers directly, other corporate players made major contributions to the Bay Street payday related to this deal. Quebecor Inc., which will see its Videotron division acquire Shaw’s Freedom Mobile for $2.85-billion as part of the transaction, hired Bennett Jones LLP to represent its interests in the recent dispute at the Competition Tribunal, which public filings show came at a cost of roughly $2-million.
“If the fees are a high number, it reflects the reality of what it takes to get a complex transaction done in a highly regulated industry where there are significant issues,” said John Clifford, chief operating officer at McMillan LLP and a partner in the firm’s merger and acquisition practice, who was not directly involved in the deal.
“We are talking a lot these days in the M&A world about increased scrutiny on transactions by regulators, particularly the competition and antitrust authorities, making it more difficult to get complicated deals done. And that just means more advisers and more costs,” Mr. Clifford said.
“It is a reflection of the effort required, particularly as it relates to the lawyers who charge by the hour as opposed to the investment bankers who charge a percentage of the deal price.”
Goodmans LLP served as the legal adviser for Rogers over the course of the Shaw transaction while Shaw retained Davies Ward Phillips & Vineberg LLP as well as Wachtell, Lipton, Rosen & Katz. Rogers also retained Toronto litigation firm Lax O’Sullivan Lisus Gottlieb LLP over the course of the regulatory battle.