Astral Media Inc. (ACM/A), the Canadian broadcaster that BCE Inc. (BCE) agreed to buy for C$3 billion ($3.1 billion), fell the most in more than two months as investors bet that the country’s telecommunications regulator will block the sale.
The difference between BCE’s C$50 per-share offer and today’s stock price widened to the most in more than a month, a signal that traders are betting the transaction is less likely to get done, according to data compiled by Bloomberg. The current gap is second-highest among Canadian takeovers valued at more than $1 billion.
Astral fell 2.3 percent to C$47.35 at 1:17 p.m. in Toronto, the biggest drop since Aug. 13. Montreal-based BCE gained 0.5 percent to C$43.71.
The Canadian Radio-television Telecommunications Commission said late yesterday it will release a decision on the deal after the close of trading today. The release may have caught some investors by surprise, Sachin Shah, a Jersey City, New Jersey- based special situations analyst at Tullett Prebon (TLPR), said in a telephone interview.
“It was a little unexpected to see the CRTC say ’hey, we’re going to announce the result of the decision at 4 o’clock,’” he said. “We are essentially at the 11th hour in regards to Astral Media and if you’re feeling unsure of yourself in going into the CRTC decision, then you’re basically reducing your position.”
BCE Chief Executive Officer George Cope has made almost C$8 billion in takeovers since 2010, including the Astral deal announced on March 16. Cope’s latest bid is running into opposition from rivals and consumer lobby groups which say buying Astral will give BCE too much power. Montreal-based Astral is a media company with brands that include HBO Canada and The Movie Network, and operates 84 radio stations in 50 markets in Canada.
The Ottawa-based Public Interest Advocacy Centre has said the deal would mean higher prices and less choice for consumers. BCE rival Rogers Communications Inc. (RCI/B), last month urged the CRTC to order Bell to sell its English-language services to dilute its control of Canadian programming.
Quebecor Inc., BCE’s biggest rival in French-speaking Quebec, says the Astral deal could muscle out broadcasters like its TVA sports channel and block them from carrying some sports events.
Cope said last month he plans to divest 10 radio stations to appease critics. Astral-BCE’s combined share would only account for about 24 percent of French-language viewership in Canada, 6 percentage points below Quebecor (QBR/B)’s, Cope said at the time. Its share of the English-language market would be 33.5 percent, below a regulatory threshold of 35 percent, Cope said.
“The burden of proof” that the deal is in the public’s interest “rests squarely with Astral and BCE,” CRTC Chairman Jean-Pierre Blais said last month at a hearing on the deal. He has the power to reject or approve the acquisition or prescribe new conditions.
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