Rogers Communications Inc. has a better chance of completing its takeover of Shaw Communications Inc. now that the Canadian government has clarified some of the conditions on the deal, according to Desjardins Securities.
(Bloomberg) — Rogers Communications Inc. has a better chance of completing its takeover of Shaw Communications Inc. now that the Canadian government has clarified some of the conditions on the deal, according to Desjardins Securities.
Rogers offered C$20 billion ($14.8 billion) for its rival in March 2021, but the deal has been delayed by Canada’s antitrust regulator, which says the transaction 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. 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
Shaw continues to trade well below the C$40.50-per-share takeover price. It closed at C$34.06 in Toronto on Tuesday, before Champagne’s late-afternoon statement.
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.
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