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Shaw’s special committee of directors set up to evaluate the takeover offers was advised that Bell had “effectively withdrawn from the process as [the company] was not prepared to amend its proposal regarding certain regulatory issues.”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.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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