(Reuters) – Shaw Communications Inc’s shares jumped nearly 9% on Wednesday after the federal government’s intervention late on Tuesday was seen as a sign that Canada was likely to approve Rogers Communications’ C$20 billion ($14.74 billion) bid for Shaw after being blocked by the competition bureau.
Analysts pointed out that the conditions slapped by Canada can be viewed as a good omen, signaling a settlement of the long-dragged deal.
Rogers has offered to sell Shaw’s Freedom Mobile unit to Quebecor Inc’s Videotron to allay the antitrust bureau’s concerns over reduced competition in the Canadian market following the deal.
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 this pragmatic view by the minister has the chance to provide a good middle ground to build on between the parties,” said Scotiabank analyst Maher Yaghi, who upgraded Shaw to “sector outperform” on increasing odds of the deal closing.
Cowen Inc’s Aaron Glick said the minister’s comment is definitely a positive for the deal as the competition bureau sits under him.
U.S. -listed shares of Rogers also jumped nearly 5% in morning trade.
Rogers first announced the purchase of Shaw in 2021, but Canada’s competition bureau blocked the deal saying it would lessen competition in a market where wireless bills are among the highest in the world.
Champagne’s announcement came days before the companies go into mediation at the Competition Tribunal regarding the takeover. Canada’s competition bureau has said the sale of Freedom Mobile to Videotron is not sufficient to overcome its concerns about market concentration.
“It is likely that we see a settlement coming through during the mediation process scheduled for later this week,” Glick added.
($1 = 1.3573 Canadian dollars)
(Reporting by Tiyashi Datta in Bengaluru and Divya Rajagopal; Editing by Maju Samuel)
