Moody’s eyes Rogers, Shaw for downgrade

Moody’s Investors Service said it placed its ratings for Rogers Communications Inc. and Shaw Communications Inc. on review for downgrades.

Rogers plans to acquire Shaw for C$26 billion on an enterprise value basis.

"The review for downgrade was prompted by the likelihood that Rogers' acquisition of Shaw will be funded mostly with debt and consolidated leverage will increase materially from 3x to over 5x and remain elevated for a protracted period," said Peter Adu, a Moody's vice president and senior analyst, in a press release.

The review will focus on Rogers' funding plans and effect on liquidity, deleveraging schedule, integration risks, potential synergies, regulatory impact, competitive dynamics and growth strategy for the combined company. Moody's said it expects to finish the review at or near to transaction close.

The agency noted it considers the merger “strategically appropriate.”

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