Shaw Sells ViaWest Server Unit to Peak 10 for $1.7 Billion

Updated on
  • Deal follows other major data center sales, including Verizon
  • Shaw uses cash to buy spectrum to fuel wireless push

Shaw Sells ViaWest Unit for $1.7 Billion in Wireless Push

Shaw Communications Inc. sold its ViaWest data service business to Peak 10 Holding Corp. for C$2.3 billion ($1.7 billion), three years after the Canadian telecommunications company bought it for C$1.3 billion.

ViaWest and Peak 10 combined will be North America’s largest privately held data center company, Shaw said in a statement on Tuesday. The deal frees up cash for Shaw to focus more on expanding its wireless business and competing with Telus Corp., Rogers Communications Inc. and BCE Inc. Shaw rose 3 percent to C$29.41 in Toronto, its biggest gain in two months.

Shaw, based in Calgary, has been re-adjusting its focus to providing home internet, TV and wireless services after selling its media division to Corus Entertainment Inc. and buying Wind Mobile to add wireless to its offerings. Shaw also said Tuesday it would spend C$430 million to buy wireless spectrum form Quebecor Inc., giving it the ability to offer better wireless service in Toronto and major western Canadian cities.

“This transaction should allow Shaw to redeploy cash where it is needed: wireless,” Mayer Yaghi, a Montreal-based analyst with Desjardins Securities Inc., said in a note to clients. The deal makes sense because more of ViaWest’s business was in the U.S. and therefore didn’t line up with the rest of Shaw’s operations, he said.

Rating Warning

Separately, S&P Global Ratings said that ViaWest’s B+ credit rating could be cut by one notch when the Peak 10 transaction closes -- likely in the third quarter of 2017 -- because the company will no longer enjoy Shaw’s support.

Peak 10 is a Charlotte, North Carolina-based cloud storage company. The data center and cloud storage market is growing rapidly, creating massive new revenue streams for the world’s dominant internet companies, including Microsoft Corp., Inc. and Alphabet Inc. Amazon in particular is expanding in Canada, putting pressure on local providers.

The deal follows other major recent data center sales. Digital Bridge Holdings LLC agreed to buy Vantage Data Centers from Silver Lake Partners for $1 billion in March and Verizon Communications Inc. agreed to sell its business to Equinix Inc. for $3.6 billion last year.

— With assistance by Jessica Brice

(Updates with S&P warning on ViaWest in fifth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE