Investors are casting more doubt over Rogers Communications Inc.’s proposed $20 billion takeover of Shaw Communications Inc. as last week’s national network failure draws increasing scrutiny from Canada’s industry watchdogs.
The deal spread, the difference between Shaw’s stock price and the $40.50 a share offer by Canada’s biggest cable and wireless firm, climbed to $6.17 at the close on Wednesday, its widest point in a month. That’s down from less than $3 at the start of July as investors price in further risk of the transaction collapsing in the wake of an outage that pushed millions of Rogers customers offline.
While the controversy throws Rogers into the middle of concerns around network reliability, the debacle could bolster antitrust czar Matthew Boswell’s argument that putting more power in the hands of one company could further harm competition in the nation’s already narrow telecommunications market. The antitrust agency said in May it opposed one of the country’s largest-ever mergers. As the July 31 closing date looms, uncertainty is seeping in and investors are opting out.
Rogers shares have slumped 4.5 per cent since Friday’s outage, while Shaw’s are down 5.8 per cent. At least three analysts, those at Royal Bank of Canada, Bank of Montreal and National Bank of Canada, lowered their price targets on Rogers stock as the company plans to reimburse customers to help mitigate churn.
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