Rogers Communication (TSX:RCI.B)(NYSE:RCI) stock shot up to a 52-week high of $65.72 after it announced that it would pursue the acquisition of Shaw Communication (TSX:SJR.B) for $26 billion. This would create the second-largest cellular and cable operator in Canada. Rogers hopes that the deal will improve their ability to invest in 5G networks and “synergies”.
This propelled Rogers’ stock into the black for 2021. Its shares have climbed 7.3% year-over-year at the time of this writing. In order to complete this deal, Rogers secured a record $19 billion bridge loan from the Bank of America.
The company released its final batch of 2020 results in late January. It reported strong delivery of wireless postpaid net subscriber additions of 114,000. However, service revenue and adjusted EBITDA were down 8% and 3%, respectively. Rogers achieved strong media margins even in the face of major delays for live professional sports broadcasting.
Fortunately, the environment has normalized on that front with all major leagues returning to action.
Adjusted net income dropped 19% year-over-year to $1.72 billion in 2020, while adjusted diluted earnings per share plunged 18% to $3.40. The acquisition of Shaw will extend Rogers’ reach and provide a firmer ground for it to bolster 5G networks. This race is off and going in Canada.
Shares of Rogers still possess a favourable price-to-earnings ratio of 19. Rogers offers a quarterly dividend of $0.50 per share. That represents a 3.2% yield. Investors should consider snatching up Rogers after this big deal.
