TORONTO (Reuters) -Shares in Rogers Communications Inc tumbled more than 6% on Monday as a family feud over the control of the board deepened after rival factions claimed they were in charge of one of Canada’s largest telecom companies.
Late on Sunday, former Chairman Edward Rogers issued a statement saying he intends to initiate legal proceedings in the British Columbia Supreme Court to confirm the shareholder resolution that created his reconstituted board.
That comes after the company’s board last week voted to remove Edward Rogers, son of late founder Ted Rogers, as chair after he tried to replace CEO Joe Natale with another executive. The move put him at odds with his sisters and mother.
A statement on Sunday from a Rogers Communications spokesperson reiterated Ted Rogers’ widow’s and two daughters’ support for Natale.
While family differences and disagreements at a board level are not uncommon, a public spat is rare in the Canadian corporate landscape.
It comes as Rogers is in the middle of its biggest-ever takeover, with its C$20 billion ($16.2 billion) bid for smaller rival Shaw Communications Inc, which has attracted the attention of regulators in Canada’s highly concentrated telecoms market.
Both sides of the family have said they support the deal.
Brokerage Canaccord Genuity cut its rating on Rogers’ shares to “hold” from “buy”.
Believe the current state of affairs with respect to corporate governance at Rogers is yet another reminder to investors of the differences between BCE/TELUS and family-controlled entities with dual-class capital structures, Canaccord analysts said in a note.
Rogers’ shares fell as much as 6.2%, while the broader market was flat. Even before Monday’s fall, the stock was trailing peers. Rogers shares are up 1.3% year to date, while rivals Telus Corp and BCE Inc have gained 13.8% and 16%, respectively.
(Reporting by Moira Warburton and Denny Thomas; Additional reporting by Eva Mathews in Bengaluru; Editing by Mark Porter and Shounak Dasgupta)
