Globalive bypasses Rogers, takes Freedom bid straight to Shaw

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Globalive Capital has taken its $3.75-billion offer for wireless carrier Freedom Mobile directly to Shaw Communications Inc. SJR-B-T amid frustration Rogers Communications Inc. RCI-B-T has blocked the investment firm from the sale process.

Shaw’s Freedom Mobile is up for sale as part of Toronto-based Rogers’s proposed $26-billion takeover of Calgary-based Shaw. In order to address competitive concerns regarding the merger of the country’s two largest cable systems, Rogers is looking to sell Canada’s fourth-largest wireless carrier.

Rogers has held talks with a number of prospective buyers and recently entered into negotiations with Quebecor Inc. QBR-B-T, owner of Montreal-based telecom Videotron Ltd., The Globe and Mail has previously reported. Rogers’s takeover of Shaw is still awaiting approvals from two regulators, including the Competition Bureau, which has moved to block the merger of the two cable providers.

Rogers, Shaw agree not to close $26-billion merger until deal reached with competition watchdog

Rogers CEO says there is a ‘good roster’ of possible buyers for Freedom Mobile

Toronto-based Globalive founded Freedom, formerly called Wind Mobile, in 2008 before selling it to Shaw for $1.6-billion in 2016. Now, Globalive is trying to buy it back.

Shaw did not respond to Globalive’s unsolicited offer to buy all of Freedom Mobile’s spectrum licences, network infrastructure, customer contracts and stores, according to three sources familiar with the situation. The Globe is not identifying the individuals because they are not authorized to speak publicly about the matter.

The offer, which Globalive made in early May, is essentially the same as the one the Toronto-based firm made to Rogers earlier, the sources said.

A Shaw spokesperson said the deal the company has struck with Rogers prohibits it from entertaining such an offer.

“Shaw is not in a position to either confirm or deny the veracity of whether or not Globalive made a direct offer to Shaw for the wireless assets. In any event, under the terms of the Arrangement Agreement, Shaw would not be able to enter into or participate in any discussions or negotiations with respect to any proposal of this nature,” Chethan Lakshman said in an e-mail.

A spokesperson for Rogers declined to comment.

The financing for the Globalive offer would be provided by a group of investors led by Twin Point Capital, a U.S. principal investment firm founded by Lawrence Guffey and Jonathan Friesel, and Baupost Group, a Boston-based investment manager.

Globalive chairman Anthony Lacavera said in a statement the offer to Shaw still stands.

“Rogers has continued to decline to engage with us despite the strength of the Globalive proposal toward ensuring a more competitive wireless market emerges out of the Shaw acquisition, so we decided to make our offer to Shaw directly,” Mr. Lacavera said.

He added that Globalive “has been standing by to sign the Rogers [confidentiality agreement] for over a month now, without any changes, and Rogers has declined to sign it with us.”

Previously, Mr. Lacavera had written in a letter to the federal government that the agreement contains “extraneous restrictions” around financing and communications with regulators in relation to the deal.

Globalive recently announced it has entered into a network and spectrum sharing deal with telecom giant Telus Corp. that is conditional upon Globalive acquiring Freedom, which has about two million customers in Ontario, Alberta and British Columbia. Mr. Lacavera said at the time the network sharing deal would allow Freedom to expand nationally.

Scotiabank analyst Jeff Fan has said Rogers is unlikely to entertain Globalive’s proposal unless regulators force it to. That’s because the cable, telecom and media giant is already in a disadvantaged position relative to Bell and Telus, which share parts of their cellular networks and spectrum, Mr. Fan wrote in a recent research note. “It would be three versus one on network investment and spectrum position.”

National Bank analyst Adam Shine said in a recent research note that a network and spectrum sharing deal with one of the large telcos “would certainly appear to strengthen the positioning of the eventual buyer of Freedom and [could] possibly be among key conditions sought by the Competition Bureau to extract its approval.”

Other prospective buyers Rogers has held discussions with include Stonepeak Infrastructure Partners, the New York-based private equity firm that owns rural internet provider Xplornet Communications Inc., as well as a group that includes the Aquilini family, who own the Vancouver Canucks, The Globe previously reported.

Rogers’s takeover of Shaw still requires approval from the Ministry of Innovation, Science and Economic Development, which oversees the transfer of wireless licences.

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