TORONTO — The $20 billion CDN proposed merger between Rogers Communications Inc. and Shaw Communications, which involves the sale of Freedom Mobile to Quebecor to help gain Canadian regulatory approval, is today in doubt after the three companies failed to mediate their differences with the federal competition bureau.
Shaw shares were down 6% in midday trading following the news, while Rogers shares were down slightly.
Rogers’ bid for Shaw dates to March 2021. But, getting the Canadian government to say yes has been a challenge, resulting in a mediation session as part of the Competition Tribunal process.
“The mediation did not yield a negotiated settlement,” Shaw said in an announcement distributed late Thursday, representing each of the three companies. “We are disappointed with this outcome and believe that litigation is both unnecessary and harmful to competition. The Bureau’s unwillingness to meaningfully engage unduly delays lower wireless prices for Canadian consumers.”
Shaw, Rogers and Quebecor said they “remain committed to completing this pro-competitive series of transactions and are confident in the strength and merits of our case in front of the Competition Tribunal, including the many benefits of these transactions to Canadians.”
But, completion of the proposed series of transactions, which the companies say “will positively transform the Canadian telecommunications industry in both the wireline and wireless segments,” remains unclear as to when this would transpire.
That’s not stopping the companies from exuding confidence, despite the failed mediation sessions. “The combined Videotron-Freedom business will have everything it needs to compete as a stronger fourth carrier for the long term, including critical 5G spectrum,” the companies said. “Quebecor’s commitment to lower wireless prices for Canadians across the country is one of the many benefits that the proposed transactions will create.”
Meanwhile, the combined Shaw-Rogers wireline business will have a national network “positioned to compete against the telcos for the long-term,” Rogers and Shaw believe. “Together, these transactions will deliver world-leading, affordable telecommunications that Canadian consumers need and deserve for today and into the future.”
In a statement shared with Reuters, the competition bureau responded, “We are aware of the press release issued by Rogers, Shaw and Quebecor and disagree with its contents entirely, except for the fact that a negotiated settlement was not reached.”
“Looking at the share price of Shaw, it appears that the market is giving 50-50 chance for the deal to close,” Matthew Dolgin, a Equity Analyst with Morningstar, told Reuters. “The deal is more likely to get approved than not, but we have no idea what the decision will be,” Dolgin added.
A hearing is on track for a November 7 start.
Canada’s industry minister François-Philippe Champagne has the ultimate decision-making power on whether the deal will move forward.
