In a regulatory filing on Friday, Shaw Communications revealed that Rogers Communications Inc. was not the first company to express interest in buying the former, and that Rogers’s $16 billion CAD takeover is actually the result of a bidding war between the two — reports the Financial Post.
Bradley Shaw, CEO of Shaw Communications, had a meeting with the CEO of the other company, referred to only as “Party A” in the filing, on January 6.
“These discussions were exploratory in nature and focused on the strategic merits of a possible business combination”, said the CEO, and no price was named from either side.
Shaw met with Rogers CEO Joe Natale on January 29, and a bidding war between Rogers and Party A ensued. Rogers initially offered to buy Shaw Communications for $35 CAD a share, and Party A countered with a bid of $37 CAD a share, with both offers being a mix of cash and stock.
In the second round, Party A offered $39.25 CAD a share, whereas Rogers upped its bid to $40.50 CAD per share. Party A matched Rogers’ bid, but Shaw found that “Party A’s proposed regulatory approach was not as attractive” as latter, and also contained conditions Shaw was not willing to accept.
By early March, Party A pulled out of the deal, and Shaw accepted Rogers’ takeover offer for $40.50 CAD per share.
Ever since Rogers’s takeover of Shaw Communications was announced, both telcos have seen opposition against the merger mounting.
As to who “Party A” was, that is unknown but it could be other telcos that make up the ‘Big 3’, Telus and Bell.
Canadian Industry Minister Francois-Philippe Champagne said last month that the merger presents “very serious issues and very important issues when it comes to maintaining that level of competition”.
Update: According to the Globe and Mail–the rival bidder was Bell. “Rogers outbid Bell for Shaw, was willing to go further to satisfy board on regulatory issues.”
— Alexandra Posadzki (@alexposadzki) April 24, 2021
More details from Bloomberg:
On Feb. 17, BCE submitted a proposal to buy Shaw for C$37 a share, higher than Rogers’ initial bid of C$35 a share, according to the Shaw filing. Both offers included a mix a cash and shares.
That led to a second round of bidding in which BCE proposed C$39.25 a share, while Rogers went up to C$40.50, or about C$20 billion. BCE matched that price on Feb. 27.
But Shaw’s board concluded that BCE’s “proposed regulatory approach was not as attractive” as the Rogers proposal, and contained other conditions Shaw couldn’t accept, the filing said.
“We’ve made a number of successful strategic acquisitions over the last decade and look closely at opportunities that may work,” BCE spokesman Nathan Gibson said in an email. “We determined this opportunity wasn’t in the best interests of our stakeholders.”
The filing says that on Jan. 6, Shaw Chief Executive Officer Bradley Shaw held talks with “the Chief Executive Officer of a third party (referred to as Party A),” who outlined the potential benefits of a merger. That unnamed CEO was BCE’s Mirko Bibic, according to two people familiar with the matter.