Shaw Communications Inc. jumped 9% after a government minister in Canada clarified the regulatory conditions on its deal with Rogers Communications Inc., improving the odds that the transaction will close.
(Bloomberg) — Shaw Communications Inc.
jumped 9% after a government minister in Canada clarified the regulatory conditions on its deal with Rogers Communications Inc., improving the odds that the transaction will close.
Shaw shares rose to C$37.17 as of 9:42 a.m.
in Toronto, the highest since July, while Rogers was up 5%.
Rogers agreed to pay C$20 billion ($14.8 billion) for its rival in March 2021, or C$40.50 a share, but the deal has been delayed by Canada’s antitrust regulator, which says it will weaken competition in the wireless sector.
The two companies have agreed to sell most of Shaw’s wireless assets to a third Canadian communications firm, Quebecor Inc., to try to solve that problem.
On Tuesday, Industry Minister Francois-Philippe Champagne said he’d approve the divestiture to Quebecor only if the company promises to keep the wireless licenses for at least 10 years and consumer prices improve in Ontario and Western Canada, where Shaw operates.
Quebecor Chief Executive Officer Pierre Karl Peladeau said the company will accept those terms.
That’s a sign the Rogers-Shaw deal has a path to the finish line, Desjardins analyst Jerome Dubreuil said.
The government “is signaling that the deal would be acceptable if QBR competes in the long term,” Dubreuil said in a note, referring to Quebecor’s stock ticker. “Why would Mr. Champagne set conditions if he were about to say no?”
Read more: Rogers Takeover of Shaw Gets New Conditions From Canada
The deal still has to pass the antitrust hurdle.
Rogers and Shaw are scheduled for mediation with the Competition Bureau this week. If the two sides can’t reach a settlement, the merger will head to Canada’s Competition Tribunal, a merger court.
“The odds now seem quite low that the Competition Bureau wouldn’t agree to a settlement” with Shaw and Rogers, said Aaron Glick, a merger arbitrage specialist at Cowen & Co.
The base case is for settlement, with the deal closing next week, he said.
–With assistance from Yiqin Shen.
(Updates share movement, adds comments from merger arbitrage specialist.)
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