The mega merger involving Shaw Communications (TSX:SJR.B)(NYSE:SJR) and Rogers Communications (TSX:RCI.B)(NYSE:RCI) will undoubtedly make the combined entity a major player in the industry.
However, with the companies already being among the top telecom providers in Canada, the path isn't necessarily clear for the combination to move forward. BCE Inc (TSX:BCE)(NYSE:BCE) and other rivals are opposed to the deal, saying that it would hurt competition and that the end result would be higher prices for consumers.
Currently, the Competition Bureau is reviewing the possible merger and a public hearing on the matter is set for Nov. 22 of this year. The companies first announced the deal back in March. Shaw's stock has been the biggest beneficiary thus far, as its shares jumped on the news and since the start of March, they are up by more than 60% -- well ahead of Rogers' more modest gains of 8%.
If the deal ends up falling through, Shaw's stock could have the most to lose. For that reason, holding shares of Rogers right now may be the safer move because if investors weren't convinced the merger was a great deal for the company (which the lackluster returns since then certainly suggest), the stock could rise if the Competition Bureau nixes the transaction. But if it goes through, the combined business will be a more dominant force in the industry so longer term, and it'll remain a good buy and should deliver positive returns over the years.
With both stocks paying a dividend yield of more than 3%, either way, you're still likely to collect a good yield regardless of which one you invest in today.
