(Bloomberg) — Shares of Shaw Communications Inc. are trading 7% below the takeover price offered by Rogers Communications Inc., the biggest gap since February, as Canadian regulators prepare rulings on the deal.
Shaw has fallen six consecutive days in Toronto in a period of broad weakness in equity markets, closing at C$37.58 on Tuesday. Shares of Rogers and Canada’s other major telecommunications firms, BCE Inc. and Telus Corp., have also dropped in the past two weeks as investors reprice dividend stocks in an environment of higher interest rates and stubborn inflation.
Rogers, the country’s largest wireless and cable provider, offered C$40.50 per share for Shaw more than a year ago in a takeover that would allow it to become a national cable player and bolster its wireless infrastructure in Western Canada.
The companies have set June 13 as the deadline for closing the deal, though they could extend it if regulators need more time.
The deal has already cleared one regulatory hurdle: Canada’s broadcast regulator signed off the transfer of Shaw’s broadcast systems to Rogers. But the deal still requires approval from the Competition Bureau and a key federal ministry.
Most analysts have said they expect deal the deal to be completed at that price, but with divestitures. Rogers buying Shaw would eliminate the No. 4 wireless competitor in major cities like Toronto and Vancouver. Rogers executives believe the government won’t allow that, so the company has already solicited bidders for Shaw’s wireless division, Freedom Mobile.
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