Catalyst opposition unlikely to affect Shaw Media sale: analyst

The pressure Catalyst Capital Group Inc. has been applying on Corus Entertainment Inc. shareholders to vote down a proposal to purchase the media division of Shaw Communications Inc. isn't likely to have an effect on the remaining steps in the acquisition process. "If the shareholders vote yes, it is what it is. The deal's going to be exactly as stipulated," Aravinda Galappatthige, an analyst with Canaccord Genuity, said in a phone interview Monday. For the past few weeks, Catalyst — a Corus shareholder — has been urging other minority shareholders to vote down the acquisition resolution up for approval on Wednesday. Further approval is also required from other third parties, such as the CRTC and Toronto Stock Exchange. In a research note issued last week, Galappatthige said that "shareholders would naturally like to have better terms" but noted that the "probability is still weighing on the side of a yes vote," despite Catalyst's campaign. In its most-recent open letter posted online Monday, Catalyst repeated calls for Shaw to disclose details such as the process by which the market value of Shaw Media was determined. "Yes, we are pressing for answers. We have no choice, as you have created an artificial and unnecessary deadline by rushing Corus shareholders into a vote on an acquisition that would not close until later in the year — while material disclosure and process issues remain unresolved," the letter said. On Monday, the Ontario Securities Commission denied a request from Catalyst to bring an application under the Ontario Securities Act that would have let the company push Corus to "correct the materially misleading disclosure defects" and postpone this week's shareholder's meeting. A report prepared by Corus for shareholders about the deal outlined that the acquisition agreement stipulates that the shareholder's meeting take place "as soon as reasonably practicable," but no later than March 31. Corus announced the $2.65 billion deal for Shaw Media in January. Barclays appraised Shaw Media's fair market value between $2.45 billion and $2.85 billion, said the report. The company offered subscription receipts to generate cash during the purchase. In previous press releases, Catalyst has said Corus is overpaying for Shaw Media by "up to $858 million and paying excessive fees." "You are asking Corus shareholders to pay a very high price, one that has hurt analyst confidence in Corus stock," said Monday's letter. But Catalyst's calculations of the market value for Shaw "appear to be based on flawed and ill-informed assumptions that are simply not credible," Corus said in a press release, adding that it was "confident" in the opinion given by Barclays, which was "based on extensive analysis including discounted cash flow analysis and comparable precedent transactions in the broadcaster sector in Canada and the United States." In a March 2 presentation posted online, Corus also said that the "Shaw Family's participation in the offering was an important demonstration of its commitment to the future of Corus." Galappitthige said he didn't know why Catalyst was pushing so fervently against the deal. "You're going to have to take them at their word and accept they really think there's more value in Corus and they feel that by doing this, they can unearth more value for Corus," he said. "They seem to be operating under the assumption that there's a deal to be done if they vote no. And I don't know if that's the case... From what I've read, it doesn't look like it's going to go 'no.'" If Corus gets the necessary majority shareholder approval, the deal is expected to close in the company's third quarter of this fiscal year. Last month, the CRTC denied requests to hold a public hearing on the acquisition. — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Catalyst opposition unlikely to affect Shaw Media sale: analyst

News | March 7, 2016

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Catalyst opposition unlikely to affect Shaw Media sale: analyst

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