Rogers Wireless shareholders defeat plan to privatize company
9/11/2001

Toronto - Rogers Wireless Communications' minority shareholders have killed a plan by parent company Rogers Communications to take the mobile phone company private.

The deal -- valued at about $500 million when proposed in June -- was quashed at a meeting Tuesday when 79 per cent of the Rogers Wireless class B minority shareholders voted against the proposal.

The deal would have seen Rogers Wireless taken private, owned only by its parent Rogers Communications and U.S.-based AT&T; Wireless.

As a result, Rogers Wireless will remain a public company. The parent firm owns 51 per cent of the Wireless B shares, while AT&T; Wireless owns 33 per cent and minority shareholders own 16 per cent.

"We believe that this proposal represented a fair value and significant opportunity for Rogers Wireless shareholders," Ted Rogers, chief executive of Rogers Communications, said in a release.

"With this public process now behind us, Rogers Wireless will go forward as a public company and will continue to operate the business to maximize value for all of its shareholders."

Rogers Communications spokeswoman Jan Innes said Ted Rogers had indicated that the price offered for the shares was a premium and he wasn't interested in raising the price.

Rogers had proposed to buy each Rogers Wireless B share for 1.1 Rogers Communications B non-voting shares. The offer was originally valued at about $27 a share, a 24 per cent premium over the average price in the five previous days.

On the Toronto stock market Tuesday, Rogers Wireless B shares were at $25.06 while Rogers B shares were at $23.25.

Rogers had suggested Rogers Wireless shareholders would gain more liquidity by owning Rogers shares. The bigger company needed approval by two-thirds of the minority shareholders.

The result came after an independent committee from Rogers Wireless board had recommended minority shareholders not vote for the amalgamation, saying the price wasn't fair to them. Rogers Communications disagreed with that view and continued with the deal without sweetening the bid.

"It had to do with the price that was being offered, I think the shareholders thought the price" wasn't good enough, said Eamon Hooey, president of Hooey Associates Telecommunications Consulting Services.

It's unusual that minority shareholders can thwart a deal, but in this case it worked, Hooey said. This won't change Rogers Wireless operations, he said.

Owners of all of Rogers Wireless A shares voted for the deal, as did those with 81 per cent of the Wireless B shares -- including those held by Rogers and AT&T.; In the end, 94 per cent of all of Rogers Wireless shareholders voted for the deal.

The deal would have boosted Rogers Communications' share in the wireless division to about 65 per cent.

The proposal was launched at a time when telecom stock prices were sagging amid a slowdown in the industry, and Rogers said it was an opportune time for it to take the wireless firm private.

Analysts had also expected Rogers was preparing itself in case the government changed foreign ownership limits for telecom companies.


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