Rogers 2013 Annual Report Download - page 108

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7: BUSINESS COMBINATIONS
We made several acquisitions in 2013, which we describe below. We
accounted for these using the acquisition method of accounting in
accordance with IFRS 3, Business Combinations, and included the
results of operations of the acquired entities from the dates of
acquisition in our consolidated statements of income. Goodwill
recognized on these acquisitions is not tax deductible. It represents the
expected operational synergies with the business acquired and/or
intangible assets that do not qualify to be recognized separately.
Transactions with Shaw Communications Inc. (Shaw)
In January 2013, we entered into an agreement with Shaw to secure an
option to purchase Shaw’s Advanced Wireless Services (AWS) spectrum
holdings in 2014, and to acquire Mountain Cable, Shaw’s cable system
in Hamilton, Ontario. As part of the agreement, Shaw acquired our
one-third equity interest in TVtropolis.
Spectrum Licence Option Deposit
In 2013, we paid total deposits of $250 million for the option to
purchase Shaw’s AWS spectrum holdings pending regulatory approval,
and included the deposits in other long-term assets in the consolidated
statements of financial position. Under the agreement, $200 million of
this balance is refundable if the transaction does not close. We do not
expect to exercise the spectrum licence option until late 2014, and it is
subject to approval by Industry Canada.
Acquisition of Mountain Cable
On May 1, 2013, we closed the agreement with Shaw to purchase
100% of the common shares of Mountain Cable for cash consideration
of $398 million. Mountain Cable delivers a full bundle of advanced
cable television, Internet and telephony services over its recently
upgraded hybrid fibre and coaxial cable network. The acquisition
expands our cable business in the Southern Ontario area and will allow
us to drive synergies through a larger service area and cost efficiencies.
Sale of TVtropolis
In 2013, we closed the transaction to sell our one-third interest in
TVtropolis after obtaining regulatory approval from the CRTC. We
received proceeds of $59 million and recorded a gain of $47 million in
other income.
Blackiron Data (Blackiron)
On April 17, 2013, we closed an agreement to acquire 100% of the
common shares of Blackiron for cash consideration of $198 million.
Blackiron provides Business Solutions the ability to enhance its suite of
enterprise-level data centre and cloud computing services along with
fibre-based network connectivity services.
Score Media Inc. (theScore)
On April 30, 2013, we received final regulatory approval to acquire
theScore. We had already paid $167 million on October 19, 2012 to
obtain 100% of the common shares of theScore. These shares were
held in trust until we received regulatory approval and obtained control
of the business. The acquisition builds on our sports broadcasting
capabilities and reinforces our delivery of premium sports content to its
audiences on their platform of choice.
Pivot Data Centres (Pivot)
On October 1, 2013, we purchased 100% of the common shares of
Pivot for cash consideration of $158 million. Pivot further positions
Business Solutions as a leader in Canadian data centre and hosting
services and will enhance Business Solutions’ ability to serve key markets
with enhanced managed and cloud service offering.
Other
In 2013, we completed other individually immaterial acquisitions for
total cash consideration of $40 million.
We also paid deposits totalling $45 million in late 2013 related to the
acquisition of certain dealer stores, which closed on January 2, 2014.
This deposit is included in other long-term assets (note 15). The fair
values of the assets acquired and liabilities assumed in this acquisition is
under review and expected to be finalized in the first quarter of 2014.
104 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT