Mediation talks with Canada’s competition control body over Rogers Communications Inc.’s controversial $ 26 billion merger. RCI-BT and Shaw Communications Inc. SJR-BT were unsuccessful, telecommunications said Wednesday.
The aim of the two companies in the talks, which were held on Monday and Tuesday, was to reach an agreement that would resolve the objections of the Competition Office to the takeover of Shaw by Rogers and allow the parties avoid a lengthy hearing in the Competition Court.
Failure to reach a resolution means more delays for the deal, which companies announced in March 2021 and which were expected to be completed in the first half of this year. Rogers and Shaw have agreed not to close their merger until they reach an agreement with Matthew Boswell, the competition commissioner, or win a challenge in court, a process that could last until early next year.
Rogers and Shaw said in a statement that they can continue discussions with the commissioner at any time and that they intend to “work constructively … to highlight the many benefits of the merger.”
The competition commissioner is trying to block the merger of Canada’s two largest cable companies, arguing it would result in higher prices, poorer service and fewer options for consumers, especially for wireless services.
Trying to resolve those concerns, Rogers reached an agreement last month to sell Shaw’s wireless operator, Freedom Mobile, to Quebecor Inc. QBR-BT, owner of Montreal-based cable company Videotron Ltd., for $ 2.85 billion. Freedom is the fourth largest carrier in Canada, with 1.7 million customers in Ontario, Alberta and BC, and has been credited with reducing wireless prices in recent years.
However, the sale would not include 450,000 Shaw Mobile customers in western Canada, who receive discounted wireless services included with cable and Internet. Rogers plans to keep these customers.
Both companies did not indicate why the mediation was not successful.
Mediation was already scheduled before the Quebecor agreement was reached.
Scotiabank analyst Maher Yaghi said the Competition Bureau only had two weeks to review the proposed sale, which may not have been long enough. Rogers, Shaw and Quebecor must also finalize the terms of a final agreement, which they plan to make on or before July 15.
“While the office fiercely opposes this transaction, we do not currently see a better choice made in Canada than Freedom Mobile’s Quebecor acquisition proposal to establish a new credible wireless competitor,” Mr. . research note.
Rogers, Shaw and the Competition Bureau may participate in a second round of mediation in October, ahead of the court hearing, Mr.
“If the office decides to play hard and not cede its prerogatives, Rogers is likely to have no choice but to go to the Competition Court and defend his case,” Yaghi said, noting that this would probably mean that the merger would not close. until the fourth quarter of this year or the first quarter of 2023.
“Making the final decision next year opens Rogers to the possibility of having to refinance the debt that was raised earlier this year, causing some changes in the interest cost assumed to finance the deal.” , Yaghi said, referring to $ 13. billion bonds Rogers sold last March to fund the merger.
Globalive Capital President Anthony Lacavera, who founded Freedom in 2008 and has been competing to buy it again, described the development as positive.
“I am optimistic that the government will make sure there is a real competitor,” Mr. Lacavera, who has not been invited to the sale process, but has offered Rogers $ 3.75 billion for the wireless operator. “They won’t tip over, they won’t push them.”
The acquisition still requires the approval of the Ministry of Innovation, Science and Economic Development, which oversees the transfer of wireless licenses. The deadline to close the deal is July 31st.
If Rogers does not complete the acquisition, he will have to pay Shaw a $ 1.2 billion rest commission, as well as $ 120 million to redeem his preferred shares.
Earlier this week, the Alberta government issued a notice stating that it plans to intervene in the competition review, in light of the significant presence of telecommunications in the province and the potential impact of the agreement. in Alberta’s consumers, workers and economy.
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