Following the government’s intervention, which heightened hopes that Canada would likely approve Rogers Communications’ C$20 billion offer for Shaw, shares of Shaw Communications Inc. increased by as much as 10% on Wednesday.
Analysts said they expected the deal to close before year end as the terms put forward by Industry Minister Francois-Philippe Champagne late on Tuesday brings Canada’s anti-trust authority and Rogers-Shaw a step closer to a settlement.
The merger is still being opposed by Canada’s antitrust agency.
In an email, a representative of the competition bureau stated, “We remain steadfast in our resolve to challenge this proposed merger to defend the public interest.” The agency declined to make any other comments and stated that the courts would decide the case.
Rogers made an offer to acquire Shaw in March 2021, but the Competition Bureau rejected it on the grounds that it would reduce competition in a market where cellular costs are among the highest in the world.
According to Aaron Glick, an analyst at New York-based Cowen, “it seems likely that we will see a settlement come through during the mediation process scheduled for later this week.” Since the competition bureau sits under the minister, it is a signal to the bureau to settle, he said.
Shaw finished up up 7. 2% while Rogers shares rose 5.8% at the close.
According to Morningstar stock analyst Matthew Dolgin, the mediation between the parties appears to be more successful now than it did a few days ago.
Rogers proposed selling Shaw-owned Freedom Mobile to Quebecor in order to alleviate the antitrust agency’s worries.
On Tuesday, Champagne outlined conditions to approve that deal, saying Quebecor should hold on the new spectrum for at least 10 years and keep the price of its services at par with what they are in Quebec, which is 20% lower than rest of Canada.
The terms set forth by the minister, according to Quebecor Chief Executive Pierre Karl Peladeau, will be accepted by the firm.
Champagne made its declaration as the businesses were getting ready to start a two-day mediation process at the Competition Tribunal on Thursday. The sale of Freedom Mobile to Quebecor, according to the competition bureau, is insufficient to allay its worries about market concentration.
Even though the parties are not required to reach a settlement, the bureau and the corporations will strive to find a solution throughout the mediation process.
If the mediation is unsuccessful, a hearing is planned to begin on November 7.
According to Scotiabank analyst Maher Yaghi, “we believe this realistic view by the minister has the potential to give a good middle ground to build on between the parties.” Yaghi raised Shaw to “sector outperform” on the grounds that the likelihood of the merger closing had increased.
(Editing by Maju Samuel, Marguerita Choy, and Bill Berkrot; reporting by Tiyashi Datta in Bengaluru and Divya Rajagopal in Toronto.)
Shares of Rogers and Shaw increase in anticipation of the merger being approved following Ottawa’s intervention.
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