Rogers Communications (TSX: RCI.A and RCI.B; NYSE: RCI) and Shaw Communications have revealed that approval of the planned acquisition of the latter by the former has encountered turbulence. The two Canadian cable MSOs say that Commissioner of Competition Matthew Boswell plans to file objections to the deal with the Competition Tribunal. The companies assert they remain fully committed to the deal – but have postponed the planned close from next month to July 31, 2022, to give them time to deal with this new hurdle.
Rogers announced its intention to buy Shaw for approximately CAN$26 billion ($20.85 billion), inclusive of approximately CAN$6 billion ($4.8 billion) of Shaw debt in March of last year (see “Rogers, Shaw agree to merge”). Since then, Rogers has agreed to sell Shaw’s mobile communications business unit to appease Canadian competition authorities. Apparently, that isn’t enough to satisfy the Commissioner of Competition.
“The Competition Bureau conducted a rigorous investigation of the proposed Rogers-Shaw merger and concluded that it would substantially prevent or lessen competition in wireless services,” commented Boswell. “Eliminating Shaw would remove a strong, independent competitor in Canada’s wireless market – one that has driven down prices, made data more accessible, and offered innovative services to its customers. We are taking action to block this merger to preserve competition and choice for an essential service that Canadians expect to be affordable and high quality.”
“The companies have offered to address concerns regarding the possible impact of the Transaction on Canada’s competitive wireless market by proposing the full divesture of Shaw’s wireless business, Freedom Mobile. Rogers and Shaw are engaged in a process to sell Freedom Mobile, with a view to addressing concerns raised by the Commissioner of Competition and ISED [the Ministry of Innovation, Science and Economic Development],” the companies responded in a joint statement.
Despite the wireless-related headwinds, the proposed merger has received approval from the companies’ shareholders and the Court of Queen’s Bench of Alberta. Meanwhile the Canadian Radio-television and Telecommunications Commission (CRTC) has approved Rogers’ acquisition of Shaw’s broadcasting services, subject to certain conditions and safeguards. The transaction awaits the approval of the ISED.
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