By Arsheeya Bajwa and Aditya Soni
(Reuters) -Rogers Communications said it would buy Bell's stake in Maple Leaf Sports & Entertainment for C$4.7 billion ($3.46 billion) to become the majority owner of the Canadian sports firm behind the Toronto Raptors basketball team and NHL's Toronto Maple Leafs.
With the purchase of Bell's 37.5% stake, Rogers (NYSE:ROG) will double its ownership in the company and take control of some of the most widely followed sports teams in Canada. Rogers already owns the Toronto Blue Jays of Major League Baseball.
For Bell, the deal could aid a restructuring sparked by a decline in its legacy phone and news business. The company's shares were up more than 4% on Wednesday.
Rogers and Bell jointly bought a majority stake in MLSE in 2012, drawn by its prized collection of sports assets including the Toronto FC soccer team and Ontario's Scotiabank Arena.
Since then, interest in sports investments has boomed with investment firms and billionaires snapping up top teams to capitalize on lucrative broadcast deals and loyal fan bases.
"MLSE continues to appreciate significantly," Rogers CEO Tony Staffieri said, adding that the "agreement also ensures long-term Canadian ownership and investment of these iconic teams."
Sports broadcasting has been a bright spot for Rogers amid a broader decline in cable TV demand. Its media sales grew 7% in the June quarter due to higher sports-related revenue.
"It's a rich price and presumably, they (Rogers) would look to leverage that ownership into benefits for their core cable/wireless business," said Pivotal Research analyst Jeff Wlodarczak.
"It's great monetization of assets for Bell."
Bell said the deal will allow it to renew its existing MLSE broadcast and sponsorship rights long-term at fair market value, including access to rights for half of Toronto Raptors games.
The company, also known as BCE (NYSE:BCE), has recently turned to asset sales and in June agreed to a C$1 billion sale of telecom provider Northwestel to Sixty North Unity.
Analysts said the concentration of Toronto sports teams in the hands of Rogers could invite regulatory scrutiny.
"Both companies' telecom businesses are heavily scrutinized by regulators," said eMarketer analyst Paul Briggs.
($1 = 1.3593 Canadian dollars)