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  • Two leading proxy advisory firms have recommended that shareholders support the proposed business combination between Shaw and Rogers
  • ISS and Glass Lewis are leading independent proxy advisory firms that provide voting recommendations to institutional shareholders
  • Holders of Class A and B shares of Shaw will be able to vote on a resolution approving the arrangement at a virtual meeting to be held on May 20 @ 10 am MT
  • The arrangement remains subject to other customary closing conditions, including court approval and approvals from certain Canadian regulators
  • Shaw Communications Inc. are down 0.028 per cent, trading at C$36.08 per share at 1:52 pm ET

Two leading proxy advisory firms have recommended that shareholders support the proposed business combination between Shaw and Rogers.

Shaw Communications (SJR.B) and Rogers Communications (RCI.B) entered into an agreement to combine their respective businesses on March 13, 2021.

Under the terms of the agreement, Rogers will acquire all of Shaw’s issued and outstanding Class A Shares and Class B shares.

ISS and Glass Lewis are leading independent proxy advisory firms that provide voting recommendations to institutional shareholders.

In reaching its conclusion, ISS noted:

“The value of consideration offered to Non-Shaw Family Shareholders represents a significant premium to the unaffected price of both Class A (33.5 percent) and Class B Shares (69.5 percent), while all cash consideration will provide immediate liquidity and certainty of value. Shaw has ensured that there is no premium paid in respect of Class A Shares versus Class B Shares. Finally, the sale process undertaken by Shaw appears to be adequate, with reference and context to the Shaw’s size and position within the Canadian telecommunications industry and the fact that Shaw negotiated on a non-exclusive basis for a reasonable period with two parties. In light of the foregoing, shareholder approval of this resolution is warranted.”

In reaching its conclusion, Glass Lewis noted:

“We note this high-water mark also materially exceeds Shaw’s stand-alone average trailing EBITDA multiple during each of the one-year periods ended March 12, 2019, 2020 and 2021 (i.e. 9.6x, 8.9x and 8.0x, respectively), suggesting investors have little historical cause to anticipate the Company would independently achieve a similar valuation on a durable basis in the near- to medium-term. That conclusion is bolstered by reference to the following: (i) the unaffected closing price of Shaw’s more widely floated Class B shares never topped C$31.67 per share across the Company’s nearly 40-year trading period prior to the announcement; and (ii) based on industry analyst reports available at the time of announcement, Shaw’s Class B shares had a consensus median price target of just C$27.00, moderately above the Company’s pre-announcement price (i.e. $23.90 per share) and well below the C$40.50 per share offer. In short, whether viewed in context with other industry deals or Shaw’s anticipated stand-alone trajectory, the all-cash arrangement available to unaffiliated investors appears to reflect a rather compelling exit value.”

Shaw Special Meeting of Shareholders

A special meeting of holders of Class A and Class B shares will be held virtually on May 20, 2021, at 10:00 a.m. (Mountain time).

The purpose of the meeting is for shareholders to vote on a resolution approving the arrangement. Only Class A and Class B shareholders of record at the close of business on April 6, 2021 will be entitled to vote at the meeting. Due to COVID-19 and related recommendations of Canadian public health officials, the Meeting will be conducted via live webcast online at www.virtualshareholdermeeting.com/shawspecial2021.

Shaw’s Board and senior management have agreed to vote all of the shares they own in favour of the arrangement. The Shaw family shareholders have also irrevocably agreed to vote all of their Class A shares (representing approximately 79% of the outstanding Class A shares) and Class B shares (representing approximately 8% of the outstanding Class B shares) in favour of the arrangement.

In addition, Cathton Investments Ltd. and New Horizons Communications Holdings Ltd. have agreed to vote all of their Class A shares in favour of the arrangement.

About the transaction

The arrangement remains subject to other customary closing conditions, including court approval and approvals from certain Canadian regulators.

Shaw and Rogers intend to work cooperatively and constructively with the Competition Bureau, the Ministry of Innovation, Science and Economic Development and the Canadian Radio-television and Telecommunications Commission in order to secure the requisite regulatory approvals. Subject to receipt of all required approvals and satisfaction of all closing conditions, the Arrangement is currently anticipated to be completed in the first half of 2022.

Shaw Communications Inc. are down 0.028 per cent, trading at C$36.08 per share at 1:52 pm ET.

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