Hoping to appease competition concerns about their proposed merger, Rogers Communications Inc. and Shaw Communications Inc. have reached an agreement to sell Shaw’s Freedom Mobile Inc. mobile services unit to Quebecor Inc.’s Videotron Ltd. subsidiary. The sale is contingent on the usual closing conditions – as well as whether the Rogers/Shaw merger goes through.
The newly signed definitive agreement follows the lines of a preliminary agreement announced last June that calls for Quebecor to acquire Freedom Mobile on a cash-free, debt-free basis at an enterprise value of C$2.85 billion ($2.21 billion; see “Rogers, Shaw propose divestiture of Freedom Mobile to Quebecor”).
Rogers and Shaw have pursued the divestiture in hopes of easing the concerns of Commissioner of Competition Matthew Boswell that their proposed tie up would damage competition in the mobile services market. The parties involved expressed confidence that the sale of Freedom Mobile to Quebecor would accomplish their mission.
“We are very pleased with this agreement, and we are determined to continue building on Freedom’s assets,” commented Pierre Karl Péladeau, president and CEO of Quebecor. “Quebecor has shown that it is the best player to create real competition and disrupt the market. Our strong track record combined with Freedom’s solid Canadian footprint will allow us to offer consumers in British Columbia, Alberta, and Ontario more choice, value, and affordability through discounted multiservice bundles and innovative products.”
“This agreement with Quebecor brings us one step closer to completing our merger with Shaw,” said Tony Staffieri, president and CEO of Rogers. “We strongly believe that this divestiture solution addresses the concerns raised by the Commissioner of Competition and the Minister of Innovation, Science and Industry and we look forward to securing the outstanding regulatory approvals for our merger with Shaw so that we can start delivering its significant long-term benefits to Canadian consumers and businesses, including improved network resiliency.”
“Bringing Freedom Mobile and Quebecor together will expand Freedom’s scope to create a national provider with greater ability to invest and compete for the future growth and technology Canadians will need,” added Brad Shaw, executive chairman and CEO of Shaw.
Neither Boswell nor the Competition Bureau have commented on the deal. However, a meeting among Boswell and representatives of Rogers and Shaw in early July, after the initial agreement to sell Freedom Mobile became public, failed to convince Boswell to alter his stance (see "Canada's Rogers, Shaw still face doubts on benefits of merger").