Rogers and Shaw push back merger deadline again

Deal Handshake

Rogers and Shaw have once again moved back the deadline for their proposed merger, having failed to secure the approval of the relevant authorities, but this latest delay promises to be shorter than others.

The Canadian operators inked a merger deal as long ago as March 2021 and were initially working to a first-half 2022 completion date, but the regulatory process turned out to be trickier than they had anticipated. As such, they extended the terms of their arrangement to 31 January, but with an appeals court verdict coming as recently as last week – it went in their favour incidentally – meeting the new date was always going to be a tough ask.

As such, they are now working towards firming things up by 17 February.

The telcos are waiting on the green light from Innovation, Science and Industry Minister François-Philippe Champagne, who will likely acquiesce, but with concessions that he perhaps hasn’t fully figured out yet.

“Innovation, Science and Economic Development Canada (ISED) must approve the transfer of spectrum licenses from Shaw to Videotron – in connection with the proposed acquisition of Freedom Mobile by Videotron – before the combination of Rogers and Shaw can proceed,” the telcos reminded the industry in a joint statement on Monday. “The companies continue to work with ISED to secure the final approval needed to close the pro-competitive transactions.”

Rogers and Shaw agreed to sell Shaw’s Freedom Mobile unit to Videotron parent Quebecor in June as a concession designed to ease competition concerns. The deadline for that transaction has now also moved to 17 February.

“All parties remain committed to the pro-competitive transactions, which will deliver significant benefits to Canada and Canadian consumers,” the companies said.

Which is exactly what you would expect them to say, pushing as they are to get the deal over the line. But the fact is that competition is still a touchy subject in the Canadian telecoms market, where many believe the big players are still treated preferentially.

Indeed, the appeals court verdict issued last week went against Canada’s Competition Bureau, which had challenged the Competition Tribunal’s decision to pass the merger on the grounds that was unlikely to lead to higher prices or poorer service. The Bureau disagrees, which will be a cause for concern for Canadian consumers, but has nonetheless dropped the subject and confirmed it will not pursue the matter further following the Federal Court of Appeal’s ruling.

The shifting of the telcos’ internal deal deadline by two and a half weeks has no real significance, other than to buy a bit of time. The Minister’s decision will likely come soon, and it will likely be favourable to the telcos.

Indeed, Bloomberg quoted risk arbitrage analyst Frederic Boucher at Susquehanna International Group as saying there’s a 95% probability of the transaction closing.

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