Shaw’s Dismal Fiscal Q1 Results Show Only One Bright Spot as Firm Awaits Takeover

Shaw reported a generally poor fiscal first quarter, though it was largely consistent with recent trends. We expect the merger with Rogers—along with the divestiture of Freedom Mobile to Quebecor—to be approved, so we see these results as mostly relevant for Rogers and Quebecor. We’re maintaining our probability-adjusted CAD 38 fair value estimate for Shaw. We believe the reasoning of the Competition Tribunal in saying that the proposed transaction is not anticompetitive was solid and expect the decision to hold up on appeal, paving the way for merger completion. However, Shaw’s upside remains capped at CAD 40.50, and we believe there is significant downside if the Competition Bureau’s appeal of the Tribunal’s decision is successful.