In its latest move to corner the cable market in Western Canada, Shaw Communications has made a $1.2-billion offer to buy up all the outstanding shares it does not already own in Moffat Communications.

Under the agreement, Shaw will pay $35 per share (representing a 27% premium over the 30-day weighted average trading price) or 1.05% Shaw class b non-voting shares plus $0.05 cash, so that roughly 35% ($400 million) of the total consideration is paid in cash and 65% is paid in Shaw shares.

Randy Moffat, chairman and president of Moffat, has agreed to tender roughly 52% of his common shares and will join the Shaw board when the deal is completed.

Shaw currently owns more than 5.7 million common shares in Moffat, representing roughly 15% of the total outstanding shares.

‘My decision to further the consolidation of the cable television industry was not an easy one to make,’ says Moffat. ‘The Moffat family has been involved in the Canadian broadcasting industry for over 50 years. We believe that the combination of Moffat and Shaw will create the clear leader in the communications industry in Western Canada.’

Shaw has been taking incremental interest in the Winnipeg-based company that owns 77% of wtn and 100% in ctv’s Manitoba affiliate cky-tv, bringing its stake in Moffat to 15% in the last year alone.

The pending deal would put the two tv assets on the block, with Corus being a likely contender for wtn and ctv or Chum Television likely to pick up cky.

In mid-February, when Shaw acquired 130,000 shares in the capital of Moffat (bringing its stake up to 10.2%), Randy Moffat claimed he would not sell controlling interest in his family-run business and Shaw said the deal was made for investment purposes alone. A month later, however, the cable giant and its biggest competitor, Rogers Communications, struck an asset swap deal in an effort to essentially divide the country in two.

Rogers swapped its b.c. operations representing 623,000 subscribers for Shaw’s cable operations in Southern Ontario and New Brunswick, together representing 600,000 subscribers.

Shaw then sold its 4.5 million shares in Cogeco Cable and Cogeco Inc. to Rogers for $44 per share, and Rogers sold four million shares in Cancom to Shaw for $23.50 a share.

With the potential acquisition of Moffat, close to three-quarters of Shaw’s customers will be clustered in Vancouver (630,000), Calgary (305,000), Edmonton (260,000), Winnipeg (225,000) and Victoria (140,000).

‘The addition of Moffat’s cable operations in Edmonton and Winnipeg will complete our coverage of these great cities and expand our presence in Alberta and Manitoba,’ says Jim Shaw, president and ceo of Shaw Communications.

With the Moffat takeover now pending, Rogers’ much anticipated takeover of Cogeco may be just around the corner, which would give the country’s two biggest cablers a virtual ‘duopoly’ over Canadian cable operations (with the exception of Quebecor-controlled Groupe Videotron).

If, however, Rogers were to buy Cogeco it would become a 50% equity partner with Stornoway Communications on four new digital specialty channels, including one Category 1 and three under Category 2.

With the 5-1 rule – for every one Category 2 service in which a cabler owns at least 10% and decides to pick up, it must carry five in which it has no interest – in place, Rogers buying Cogeco could place a burden on the pickup of Stornoway’s three Category 2 licences.

‘The crtc isn’t there yet,’ says spokesman Denis Carmel, but whether Rogers buys Cogeco before or after it picks up the Stornoway channels, the 5-1 rule would apply.

Shaw’s $1.2-billion offer to Moffat shareholders is expected to be completed by mid-January, 2001, after which time the Moffat shares will be deposited in trust, pending crtc approval. * Samantha Yaffe

-www.shaw.ca

-www.moffat.ca