Shaw stock to take a hit if Rogers deal doesn’t move forward: analyst

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TORONTO — Shaw Communications Inc.’s share price would take a hit if its takeover deal with Rogers Communications Inc. falls through, one analyst says, but it would remain above its pre-deal level.

In a note to investors, Desjardins analyst Jerome Dubreuil says that if the $26-billion deal between the two telecommunications giants doesn’t move forward, Shaw’s share price will fall below its current level of around $35, though it would likely remain higher than March’s pre-deal price of $23.90.

Dubreuil believes Shaw’s share price could find support in the high $20s because its latest quarterly results showed signs of improvement in its cable business. Also, recent wireless network decisions made by the CRTC could benefit Shaw, he says.

Shaw’s share price soared after the deal valued at $40.50 per share was announced, but has slumped to about $35 in recent days amid a power struggle at Rogers.

Edward Rogers, the son of late Rogers founder Ted Rogers, has turned to B.C.’s Supreme Court in an attempt to legitimize the authority of a newly formed board, while his mother, sisters and their associates argue a previous iteration of the board is the only legitimate one.

Shaw CEO Brad Shaw says he remains committed to the deal despite the drama, but if his company backs out, a material change report shows it will owe Rogers a break fee of $800 million. If Rogers walks away, it must pay Shaw $1.2 billion.

Companies in this story: (TSX:RCI, TSX:SJR)

 

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