A Canadian court backed Edward Rogers in his fight against his family at Rogers Communications Inc., handing him control of the cable and wireless company’s board of directors amid a $ 16 billion acquisition.
British Columbia Supreme Court Judge Shelley Fitzpatrick ruled in favor of Cable Scion, who had argued that she had the right to replace five board members without a shareholders meeting because she controls a majority of the voting shares of the company. The company plans to appeal.
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The decision represents a major victory in Edward Rogers’ week-long power struggle with the company and his family. His mother, Loretta Rogers, and two of his sisters joined other directors in September to block their efforts to remove CEO Joe Natale.
The court’s ruling means Edward Rogers is president again and five independent directors who had opposed him, including former AT&T executive John MacDonald and film executive Ellis Jacob, have left.
Loretta Rogers and two of her daughters, Melinda Rogers-Hixon and Martha Rogers, condemned the ruling in a joint statement, saying it comes at a “dangerous time” as Rogers Communications seeks to complete its acquisition of Shaw Communications Inc. now facing the prospect of management changes and a prolonged period of uncertainty, they said.
“We are very disappointed with the court’s ruling, which represents a black eye for good governance and shareholder rights and sets a dangerous new precedent for Canada’s capital markets by allowing independent directors of a public company to be Discharged at one stroke, Loretta Rogers, Martha Rogers and Melinda Rogers-Hixon said in an emailed statement.
Members of the Rogers family tried to reach a compromise and met Thursday to discuss ways to resolve the fight, but were unable to reach an agreement, according to a person familiar with the matter. Instead, lawyers for both sides met in a Vancouver court an hour after the markets closed on Friday to hear Fitzpatrick’s decision.
In his ruling, he pointed to the bitter nature of the family feud, including Martha Rogers’ “energetic, if not inflammatory” tweets against her brother. But the judge said that had nothing to do with issues of law, which revolved around the company’s own rules in its articles of incorporation.
“These family feuds are an interesting backdrop for this feud that would be more in keeping with a Shakespearean drama. They have undoubtedly added a voyeuristic element on the part of many to the life of a very wealthy Canadian family and this aspect of the dispute has generated some media coverage, ”he wrote. “However, in my opinion, family problems are of little help in determining the narrow legal problem posed.”
Natale’s future is in doubt. Edward Rogers said in an emailed statement that he wants “a return to stability” and a focus on closing the deal with Shaw. “Mr. Natale remains CEO and director of Rogers Communications and has the support of the board,” he said, contradicting his previous actions regarding the CEO.
Lawyers for Edward Rogers said in court that he promised not to make immediate changes to the administration, pending appeal of the decision. But he also said in court documents that he has long been concerned about the executive, who has been chief executive officer since April 2017. His court documents included a presentation showing Rogers behind BCE Inc. and Telus Corp. in a series. of measurements. – including the share price.
It is unusual for a company to change top executives while in the midst of a historic acquisition. Rogers Communications’ proposed acquisition of rival Shaw is the second largest acquisition by a Canadian company this year.
The confusion has already increased risks to the transaction by lending rivals’ arguments to regulators that Rogers Communications is unfit to govern such a large company, said Richard Leblanc, professor of governance, law and ethics at the University. of York.
“This infighting has a cost,” he said in an interview.
Shaw’s representatives declined to comment on the ruling. They previously said they were committed to the deal and Shaw’s investors have already voted in favor.
The Shaw deal, if approved by regulators next year, will further expand the reach of Rogers Communications, which already has more than 11 million wireless clients, about 30% of Canada’s population. The company also has a broad stake in cable and Internet services, television broadcasting, radio and sports, including the only major league team in the country.
While the court resolved a legal question about Edward Rogers’ authority to unilaterally appoint the board, it is unlikely to resolve the tensions that fractured one of the richest families in the country and revealed significant governance concerns at the corporate giant. telecommunications.
The public company is controlled by a family trust that owns approximately 97% of the voting shares and is chaired by Edward Rogers.
That structure triggered an unprecedented corporate succession dispute in September, when Edward Rogers sought to replace Natale with then-CFO Tony Staffieri. The board rejected the plan and fired Staffieri on September 29.
Three weeks later, the board stripped Edward Rogers of his chairmanship and handed him over to MacDonald.
Edward Rogers, as chairman of the family trust, retaliated by trying to remove five directors and replace them with his allies. Later, the “new board” reinstated him as president. The company said the board was illegitimate and refused to acknowledge it until Friday night after Fitzpatrick’s ruling.
As a result, for nearly two weeks, one of Canada’s largest public companies had two different men claiming to be president and two rival groups claiming to represent the 14-person board.
“This is an example of what can go wrong with dual class actions,” Catherine McCall, executive director of the Canadian Coalition for Good Governance, said in an interview before the ruling was rendered. “It’s a very good example of how when it goes wrong, it can really go wrong.”
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