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(Reuters) -Shaw Communications Inc’s shares jumped 10% on Wednesday after the government’s intervention raised hopes that Canada is likely to approve Rogers (NYSE:ROG) Communications’ C$20 billion ($14.7 billion) bid for Shaw.
Analysts said they expect the deal to close before year end as the terms put forward by Industry Minister Francois Champagne late on Tuesday brings Canada’s anti-trust authority and Rogers-Shaw a step closer to a settlement.
Rogers’ launched the deal to buy Shaw in March 2021, but the competition bureau blocked it saying it would lessen competition in a market which has among the highest wireless prices in the world.
“It is likely that we see a settlement coming through during the mediation process scheduled for later this week,” said Aaron Glick, an analyst with New York-based Cowen Inc. He said since the competition bureau sits under the minister, it is a signal to the bureau to settle.
The competition bureau did not reply to an email seeking comment.
Rogers shares jumped nearly 5%.
Matthew Dolgin, equity analyst with Morningstar said that the mediation between the parties seems more fruitful now than it appeared couple of days ago.
To allay the anti-trust bureau’s concerns, Rogers offered to sell Shaw-owned Freedom Mobile to Quebecor. On Tuesday, Champagne outlined conditions to approve that deal, saying Quebecor held on the new spectrum for at least 10 years and keep the price of its services at par with what they are in Quebec, which is 20% lower than rest of Canada.
In a statement to Reuters on Tuesday, Quebecor Chief Executive Pierre Karl Péladeau said the company intends to accept the conditions stipulated by the minister.
Champagne’s announcement comes as the companies start a two-day mediation process starting Thursday at the Competition Tribunal. Competition bureau has said the sale of Freedom Mobile to Quebecor is not sufficient to overcome its concerns about market concentration.
The bureau and the companies will try and find a remedy during the mediation process though the parties are not bound to come to a settlement. If the mediation fails there will be a hearing that is scheduled to start on Nov. 7..
“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.
($1 = 1.3573 Canadian dollars)
