Rogers-Shaw lawyers could nab bigger share of C$100 million-plus fee jackpot

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TORONTO (Reuters) – As Rogers (NYSE:ROG) Communications’ long-delayed takeover of Shaw Communications (NYSE:SJR) Inc nears its final hurdle, bankers, lawyers and shareholder advisors are preparing to finally pocket a C$100 million-plus ($75 million) fee from the bitterly contested deal.

And in a rare twist, the lawyers are expected to pocket more of the total fees than the bankers, who normally benefit the most from outsized transactions, say sources. The deal is among the biggest fee events in Canadian M&A history, and a source familiar with the situation told Reuters it would land banks involved with 5% to 10% of their annual investment banking fees.

The C$20 billion deal, which will create Canada’s No. 2 telecoms operator, has passed all legal hurdles after the Competition Tribunal objected on concerns that included the merger would raise wireless fees in Canada, already the highest in the world.

After battling for two years in the courts, the antitrust agency decided to take its objections no further legally and the merger now awaits final nod from Minister of innovation, science and industry Francois-Philippe Champagne.

Rogers and Shaw estimated in April 2021 that the transaction would cost C$100 million in total fees, but some bankers and lawyers now expect the payout to be higher due to the lengthy court battle. Rogers declined to provide revised figures.

While law firms sometimes negotiate fixed fees on transactions, market participants said such deals would be unlikely on transactions that faced the amount of legal uncertainty of Rogers-Shaw. Back when the deal was launched, it was not known that Rogers would face a more than two-year battle for regulatory approval, racking up lawyer fees, who are paid by the hour.

“Due to the lengthy approval process, the legal teams are likely to take the majority of these fees, which is not typical,” said Derek Van der Plaat, a managing director at BDO Canada, M&A and Capital Markets.

The Rogers-Shaw deal is expected to be the tenth-largest deal in Canadian history since 1995, according to data from Dealogic.

Law firms Lax O’Sullivan Lisus Gottlieb represented Rogers, while Davies Ward Phillips & Vineberg and Wachtell are lawyers for Shaw.

FREEDOM SALE

Law firms Goodmans and Torys advised Rogers and its controlling shareholder, while Davies Ward Phillips and Vineberg and Wachtell, Lipton Rosen and Katz represented Shaw. Burnet, Duckworth and Palmer is an independent legal advisor to a special committee of independent directors of Shaw.

None of the law firms responded to Reuters queries on the legal fee.

Rogers retained BofA Securities and Barclays (LON:BARC) as financial advisors while Shaw was advised by TD Securities and CIBC World Markets Inc for its special committee.

A spokesperson for Barclays declined to comment and TD, CIBC and BofA did not respond to requests for comment.

While fewer fee transparency regulations in Canada make data harder to come by, another top 10 Canadian deal was EnCana Corp’s $22.4 billion spin out of its oil sands operations into Cenovus Energy (NYSE:CVE) Inc in 2009, which fetched $265 million on a before-tax basis in total fees, documents filed with the U.S. regulator showed.

Rogers agreed to sell Shaw’s mobile unit Freedom Mobile to Quebecor Inc as a concession after the competition bureau blocked the original deal, which created another fee stream. Bennett Jones represented Quebecor at the Competition Tribunal.

Rogers and Shaw on Friday extended the closing deadline for the fourth time to March 31.

($1 = 1.3329 Canadian dollars)