(Bloomberg) — The Canadian government imposed new conditions on Rogers Communications Inc.’s $14.7 billion takeover of rival Shaw Communications Inc., saying that a divestiture of Shaw’s wireless assets to another firm must guarantee better prices for consumers.
(Bloomberg) — The Canadian government imposed new conditions on Rogers Communications Inc.’s $14.7 billion takeover of rival Shaw Communications Inc., saying that a divestiture of Shaw’s wireless assets to another firm must guarantee better prices for consumers.
Rogers and Shaw have agreed to sell most of Shaw’s wireless division to Quebecor Inc. to resolve a legal challenge from Canada’s Competition Bureau, which is trying to block their merger on the grounds that it will harm competition in the sector.
Canadian Industry Minister Francois-Philippe Champagne said Tuesday he would approve the Quebecor part of the agreement on two conditions. The Montreal-based company would have to agree to hold the wireless licenses for at least 10 years, and it would have to lower prices in Ontario and Western Canada — Shaw’s territories — to levels similar to those in Quebec.
Quebecor Chief Executive Officer Pierre Karl Peladeau said on Twitter late Tuesday that he plans to accept Champagne’s conditions. Peladeau’s statement appears to set out a possible path for the Rogers-Shaw deal to finally close, more than 18 months after it was first announced.
But the deal still must get through the hurdle of the Competition Bureau.
“We will work to deliver better prices for Canadians in the other provinces and to end the reign of the ‘Big Three’ by promoting competition, the public interest and the digital economy in Canada.” Peladeau said.
That’s a reference to Rogers, BCE Inc. and Telus Corp. — the three companies that dominate Canada’s wireless market with more than 85% combined market share. Shaw is the no. 4 player in Ontario and in parts of Canada’s west.
Quebecor “is offering prices in Quebec which are on average 20% lower than in the rest of the country so I want to see the same prices being offered in Ontario and Western Canada,” Champagne said during a news conference in Ottawa after the market closed on Tuesday.
Shaw shares closed up 0.7% at C$34.06 in Toronto, still well below the C$40.50 takeover bid from Rogers.
Rogers and Shaw are due to enter mediation talks with the Competition Bureau this week, seeking an agreement to resolve the antitrust body’s concerns. Rogers has put forward a settlement proposal, according to a person familiar with the matter, speaking on condition they not be named because the matter is private. The Globe and Mail newspaper reported Tuesday that the proposal involves Quebecor also buying some fiber-optic assets.
If mediation isn’t successful, Rogers and Shaw may have to try to win their case before the Competition Tribunal, Canada’s merger court. Those hearings would begin in November.
Shaw has about 2.2 million wireless customers, most of them under the Freedom Mobile brand, according to its fiscal third quarter financial statements.
(Updates with additional information on the deal)
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