Rogers Communications (RCI) and Shaw Communications (SJR) say they are pausing their
$20 billion deal until antitrust issues are resolved and they are given a greenlight from
regulators.
The two telecommunication companies agreed to a temporary injunction on completing the
merger. That removes one possible scenario -- that they would attempt to close the deal and
then engage in a protracted court battle with Canada’s Competition Bureau, which is trying to
block Rogers’ acquisition of Shaw.
Rather, Rogers and Shaw will now negotiate a settlement with the Competition Bureau or defeat
it in an expedited hearing at the Competition Tribunal, a body similar to a court that hears
antitrust cases.
Toronto-based Rogers has been trying to acquire Shaw for $40.50 a share in what would be
one of the largest mergers in Canadian history. The company has tried to solve antitrust
complaints by selling Shaw’s Freedom Mobile division to a suitable buyer, but the Competition
Bureau argued that’s an inadequate solution to maintain competition.
The regulator alleged that “removing Shaw as a competitor threatens to undo the significant
progress that it has made introducing more competition into an already concentrated wireless
services market,” where Rogers, Telus (T) and BCE (BCE) serve about 87% of Canadian
subscribers.
Rogers’ stock is up 7% year to date at $64.95 per share. Shaw’s stock is down 6% on the year
at $36.08 per share.
