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Canadian telecom giants Rogers Communications (NYSE:RCI) and Shaw Communications (NYSE:SJR) are bucking a down market Friday, wrapping up the year with gains of 5.2% and 9.3% respectively, after Canada’s Competition Tribunal elected not to block their proposed $19.1B merger – turning the deal’s fate over to Canada’s Minister of Innovation, Science and Industry.
The tribunal rejected an effort from Canada’s Competition Bureau, which had argued the deal would cut competition in the country’s communications market, leading to worse service and higher prices.
Objections to the deal led the companies to arrange to sell Shaw’s Freedom Mobile to Vidéotron, owned by Quebecor (QBR.B:CA). That stock is also up 4.8% in Toronto.
The panel concluded that the deal wouldn’t lessen competition substantially and wouldn’t result in materially higher prices.
The decision drew praise from the two companies.
“We are pleased with the favorable decision from the Competition Tribunal and thank the Tribunal members for their work in rendering a swift decision,” Rogers and Shaw said. “This is an important milestone in the regulatory process and moves us one step closer to closing a series of transformative transactions proposed by Rogers, Shaw, and Quebecor.”
The two companies and the Shaw Family Living Trust have extended the outside date of the combination to Jan. 31, 2023, and the Freedom Mobile-Quebecor deal gets the same extension.
With the Competition Tribunal bowing out, and with approval already in hand from Shaw shareholders and the Court of King’s Bench of Alberta as well as approval for broadcast license transfers from the Canadian Radio-television and Telecommunications Commission, the acquisition will come down to Industry Minister François-Philippe Champagne, who won’t rush into the decision.
Champagne’s office says it’s aware of the decision, but likely won’t complete a review until January, lacking the full text of the Tribunal’s move. That full decision is expected within the next couple of days.
