© Stocksak. FILE PHOTO – Ethernet cables are shown in front of the Shaw Communications logos in this illustration, taken July 8, 2022. REUTERS/Dado Ruvic/Illustrations
(Stocksak) – Shaw Communications, (NYSE:) Inc’s shares jumped almost 9% on Wednesday following the intervention of the federal government late on Tuesday. This was seen by some as a sign Canada was likely approve Rogers (NYSE;) Communications’ C$20billion ($14.74billion) offer for Shaw. It had been blocked by the competition bureau.
Analysts suggested that Canada’s conditions can be viewed as a positive sign, signaling a settlement to the long-running dispute.
Rogers offered to sell Shaw’s Freedom Mobile unit, to Quebecor Inc’s Videotron in an effort to alleviate the antitrust bureau’s concerns about reduced competition on the Canadian market.
Earlier on Tuesday, Canadian Industry Minister François-Philippe Champagne said that Videotron would be required to hold the Freedom Mobile unit for at least 10 years.
“We believe that the pragmatic view of the minister has the potential to provide a good mid-ground to build on between both the parties,” Maher Yaghi, Scotiabank analyst, said. He upgraded Shaw to “sector exceed” based on increasing odds of the deal closing.
Aaron Glick, Cowen Inc’s CEO, stated that the minister’s comments are definitely a positive for this deal since the competition bureau is under him.
Rogers shares, which are U.S.-listed, also rose by nearly 5% during morning trade.
Rogers announced Shaw’s acquisition in 2021. Canada’s competition bureau opposed the deal, claiming it would reduce competition in a market with wireless bills among the highest in the country.
Champagne’s announcement was made days before the companies went into mediation at Competition Tribunal regarding the takeover. Canada’s competition bureau stated that the sale of Freedom Mobile is not enough to address its concerns about market concentration.
Glick said, “It’s likely that we see settlement coming through during mediation process scheduled for late this week.”
($1 = 1.3573 Canadian dollars)