Rogers Communications Inc. said Thursday it plans to privatize Rogers Wireless Communications by buying the remaining publicly held stake of the company.
Rogers Communications said it will exchange 1.75 of its class B shares for each of the outstanding class B shares of Rogers Wireless.
Based on the Wednesday closing prices of the two companies, Rogers Communications said the offer is worth $50.23 a share, which amounts to a premium of 16 per cent on Rogers Wireless shares.
Investors responded by sending shares of Rogers Wireless up more than 14 per cent in Thursday trading on the TSX. The stock was up $6.13 at $49.30.
Shares of Rogers Communications were down 50 cents at $28.20.
After buying the 34 per cent stake of Rogers Wireless held by AT&T Wireless last month, Roger Communications owns all of the wireless division's class A shares and 81 per cent of its class B shares. Rogers Communications has an 89 per cent equity stake and a 98 per cent voting stake in Rogers Wireless.
"Rogers Wireless shareholders will receive a generous premium for their shares, will benefit from the greater liquidity of the Rogers Communications shares, and will continue to own equity in a company with significant Canadian wireless assets," said Ted Rogers, the president and chief executive officer of Rogers Communications.
He added that Rogers Communications shareholders will benefit from a simplified corporate structure.
The board of directors of Rogers Wireless has established an independent committee to oversee an assessment of the offer from Rogers Communications.
On Nov. 8, Rogers Wireless claimed victory in its $1.4-billion takeover of Microcell Telecommunications, which operates the Fido wireless network. The takeover means Rogers Wireless will become Canada's biggest wireless carrier with 5.5 million customers.