As part of its merger agreement with Shaw, Rogers promised to propose, negotiate and agree to almost anything that will help the deal gain regulatory approval.CARLOS OSORIO/Reuters
Rogers Communications Inc.’s RCI-A-T decision to sign an unusually broad “hell or high water” clause in its takeover bid for Shaw Communications Inc. SJR-N throws yet another variable into an already complicated acquisition now that the Competition Bureau is seeking a full block of the attempted takeover.
As part of its merger agreement with Shaw, Rogers promised to propose, negotiate and agree to almost anything that will help the deal gain regulatory approval. This would include selling or licensing “all or any part of [its] businesses.”
While such promises are common in takeovers that are sure to face intense regulatory scrutiny, Rogers went far beyond the norm and wrote almost no exceptions into the merger agreement. Instead, the company agreed to very broad language that stipulates it must make its “best efforts” to appease regulators. In other words, Rogers must get the deal done, come hell or high water.
As it stands, it may not come to this. If the Competition Bureau remains intent on blocking the deal full stop, and the Competition Tribunal agrees with its reasoning, the clause won’t matter all that much.
But if a crack of daylight emerges, and a regulatory body suggests a way for the deal to get done, the clause leaves Rogers with very little negotiating power.
Should Rogers try to walk away from the proposed takeover at that point, it could face a lawsuit from Shaw, because the hell-or-high-water clause is one of the main reasons Shaw agreed to a deal with Rogers over BCE Inc.
During a bidding war between Rogers and BCE in early 2021, Shaw sought not only the highest offer possible, but also one that provided the most regulatory certainty, according to merger filings. Early in the negotiations, Rogers and Bell largely competed on price, but as the talks evolved, Rogers showed it was willing to agree to different regulatory covenants.
By the end of February, 2021, Shaw’s board of directors concluded that Bell’s “proposed regulatory approach was not as attractive as [that of Rogers] and contained conditions that were not acceptable to the board,” according to the deal proxy circular.
In early March, Shaw’s special committee of directors set up to evaluate the takeover offers was advised that Bell had “effectively withdrawn from the process as [the company] was not prepared to amend its proposal regarding certain regulatory issues.”
The Globe later reported that Rogers agreed to the hell-or-high-water clause, which could force it to sell not only Shaw’s wireless assets, such as customer accounts or airwaves, but also some of its own, and Bell was not prepared to take such a risk, according to two sources familiar with the deal.
Shortly after the Rogers-Shaw agreement was announced, analysts said Rogers would likely have to sell Freedom Mobile, Shaw’s wireless division, for the takeover to get the blessing of regulators. Rogers pushed back on that idea, but in recent months has tried to negotiate a sale.
In its announcement on Monday, the Competition Bureau made clear that it is fixated on the wireless business, writing that the proposed merger “would substantially prevent or lessen competition in wireless services.”
However, it did not mention the efforts to sell Freedom Mobile, which creates a bit of a black box for now. It is possible that a sale of this division, under certain terms, would appease the watchdog. But, as BCE originally feared, those terms could force the purchaser to unload some of its own wireless airwaves.
For now, that is merely speculation. But if such a scenario emerges, Rogers will be in a pickle. The company did not return a request for comment.
If this plays out, Rogers may argue it will simply pay Shaw the $1.2-billion break fee included in the merger agreement and walk away. However, break fees are common in any merger acquisition – and BCE had proposed one as well, albeit one that was worth less, The Globe has reported.
What helped make Rogers’ bid so unique, and so palatable to Shaw’s committee, as well as to Canadian Imperial Bank of Commerce, which provided an independent fairness opinion, were the “robust regulatory and financing covenants on the part of the purchaser,” according to merger documents.
That makes it much harder for Rogers simply to write a cheque and walk away.
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
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