Rogers-Shaw deal approval bets rise after mobile unit sale, shares rally – Reuters

Science & Technology

The Shaw Communications logo is seen at their office in Calgary, Alberta, Canada, April 17, 2019. REUTERS/Chris Wattie/File Photo
TORONTO, June 20 (Reuters) – Shares in Shaw Communications (SJRb.TO) and Rogers Communications (RCIb.TO) rallied on Monday on expectations that the sale of Shaw's mobile unit will eventually pave the way for regulatory approval of the Canadian telecom operators' C$20 billion ($15.4 billion) purchase deal.
Late on Friday, Rogers and Shaw agreed to sell Freedom Mobile unit to Quebecor Inc (QBRb.TO) for C$2.85 billion, including wireless and internet customers, in a bid to assuage competition concerns over Rogers plan to buy smaller rival Shaw.
Canada's competition commission on Monday said it would assess "remedy offers" to address the competition issues but that any remedy must eliminate a substantial reduction or prevention of competition due to the merger.
The commission had initially filed its objection to the merger last week, saying the sale of Freedom was not enough to maintain competition. read more
Rogers had previously attempted to sell Freedom to two other bidders, but the commission in its petition last month said those companies were not in a position to uphold competition in Canada, which has the world's highest wireless charges. read more
Reuters previously reported that the government sees Quebecor as a credible buyer for Freedom, in a boost to Rogers' latest effort.
"This is the best outcome possible for regulators looking to enhance the long term competition," Mathew Dolgin, an equity analyst with Morningstar, wrote in note dated June 19.
Shaw shares rose 7.4% to C$37.21 – still a discount of 8.1% to Rogers' offer price – while Rogers climbed 6%. Quebecor jumped 8.2%.
Both parties now will go to the competition tribunal to seek mediation and the case could close by June 28 if they reach a settlement, according to the competition tribunal website.
The companies said the move would ensure the government's mandate of having a viable fourth competitor in Canada's expensive telecom market.
"This deal will result into more completion… and is likely to receive regulatory approval from the Competition Bureau of Canada and the Canadian government," said Cormark Securities in a research note dated June 20.
Investors betting on the merger completion are only giving it a 75% probability for the deal getting closed, traders told Reuters. Usually successful deals have a 90-95% probability, they added.
"There is still uncertainty [on] whether the deal will be approved by the competition bureau," said a trader at New York-based asset management firm, who was not authorized to speak publicly on the matter.
A spokesperson for ministry of innovation, science and economic development said the ministry would review Rogers' sale of Freedom as the regulator responsible for spectrum transfer.
($1 = 1.3005 Canadian dollars)
Our Standards: The Thomson Reuters Trust Principles.
The wife of pro-democracy figure Kyaw Min Yu, sentenced to be executed on the orders of Myanmar's ruling generals, says that if her husband dies he will take with him the beliefs he has carried throughout a life spent fighting dictatorship.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2022 Reuters. All rights reserved

source