Corus Entertainment has agreed to purchase Shaw Media, the programming arm of Canadian cable giant Shaw Communications, in a deal valued at $2.65 billion in cash and stock.

Shaw Media includes about 19 cable networks like HGTV Canada and Food Network Canada. As part of the deal, Shaw Communications will own about 40% of Corus. The deal is expected to close in the third quarter of fiscal 2016.

"This is a transformational acquisition that redefines Corus and Canada's media landscape," said Corus CEO Doug Murphy in a statement. "This game-changing transaction brings together a powerful portfolio of synergistic media assets that will solidify Corus' position as the market leader in the highly valued Women, Kids and Family segments. It will also advance our strategic priorities through investment in content creation for our own platforms, and for global markets."

Corus Entertainment was founded by Shaw Communications executive chair JR Shaw and spun off as a separate company in 1999. Shaw Communications intends to use most of the proceeds to fund its $1.6 billion acquisition of wireless carrier Wind Mobile.

The combined Corus/Shaw Media company will have 45 specialty channels, 39 radio stations, content studio Nelvana and 15 conventional broadcast TV stations.  

"We believe these two companies will form a winning combination. Their complementary mix of assets and strong management teams fit extremely well together," said Shaw Communications executive chair JR Shaw in a statement. "This transaction represents an exciting new chapter and allows us, as a family, to participate in what we see as a very successful future for Corus, one that will support a vibrant Canadian broadcast system."

Shaw Media's assets include the specialty channels Food Network Canada, HGTV Canada, DIY Network Canada, Slice, Lifetime, History Canada, H2, Showcase, National Geographic Canada, Nat Geo Wild Canada, Action, MovieTime, IFC Canada, Global News: BC1, BBC Canada, DejaView, Crime + Investigation, DTOUR and FYI. It also includes Global Television's national conventional service with stations in Vancouver, Okanagan, Edmonton, Calgary, Lethbridge, Saskatoon, Regina, Winnipeg, Toronto, Montreal, Halifax and Saint John.

The combined companies would have revenue of about $1.9 billion in revenue, and $619 million in adjusted cash flow. The transaction is expected to generate $40-$50 million of annual cost synergies to be realized within 24 months, in addition to significant revenue synergies.

This deal is subject to approval by the Canadian Radio-television Telecommunications Commission. In addition, Corus will hold a special meeting of shareholders to vote on the deal in March.

RBC Capital Markets acted as exclusive financial advisor and Osler, Hoskin and Harcourt LLP acted as legal counsel to Corus in connection with this transaction.

David Asch has been named to oversee the over-the-top programmer shomi, owned by Shaw Media and Rogers Media. His title is senior vice president and general manger and he will oversee day-to-day management, business strategy and growth plans for the streaming service, the companies said. Initial priorities include refining shomi’s content strategy, evaluating opportunities for strategic partnerships and increased distribution, guiding the technology roadmap and preparing the organization for rapid growth, the companies said.

He has more than 16 years’ leadership experience in the media and entertainment industries, the companies noted, with expertise in content licensing, acquisition and development. He also has experience cutting deals with studios, sports leagues and other content distributors. Most recently he was SVP of content at Redbox Automated Retail. Earlier he was SVP, Video, Internet, and Content Services, at Frontier Communications, tasked with managing satellite and IPTV video distribution and partnerships, among other tasks. Before that he was executive vice president at at In Demand Networks.