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Adrian Wyld/The Canadian Press

Shareholders of Shaw Communications Inc. have voted in favour of the $20.4-billion takeover offer from Rogers Communications Inc. , though the deal still has a number of regulatory hurdles to overcome.

The vast majority – 99.8 per cent – of the votes cast at a special meeting of Shaw’s shareholders on Thursday were in favour of the merger, Shaw said in a news release.

The acquisition, which was announced in March, is expected to come under regulatory scrutiny as it would reduce the number of wireless competitors to three from four in Ontario, Alberta and British Columbia, where Shaw’s wireless business Freedom Mobile operates.

Rogers has submitted applications to the Competition Bureau, the Ministry of Innovation, Science and Economic Development (ISED), and the Canadian Radio-television and Telecommunications Commission (CRTC) – the three regulatory bodies that need to greenlight the purchase. Rogers and Shaw expect the deal to close in the first half of next year.

Many analysts have predicted that Rogers will have to sell off some wireless assets to win approval from the Competition Bureau. The bureau will weigh in on whether the merger is likely to result in a lessening of competition, while transfers of spectrum – licences to the airwaves used to the transmit wireless signals – will need approval from ISED. The CRTC will focus on the potential transfer of Shaw’s broadcasting assets to Rogers.

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Desjardins analyst Jerome Dubreuil said that Thursday’s vote was not seen as a major obstacle given the large premium being offered to Shaw’s shareholders and the fact that there has not been much pushback from the Western Canadian telecom’s largest investors.

“We believe regulatory approval generates the most concern among investors and is likely why [Shaw] does not trade at a higher price,” Mr. Dubreuil said in a note to clients. Shaw’s class-B shares closed up 1.1 per cent to $36.03 on the Toronto Stock Exchange Thursday, below the $40.50-a-share offer from Rogers.

Mr. Dubreuil said he estimates there is a 90-per-cent chance that the deal will be approved. Rogers is likely most interested in Shaw’s cable network, which has virtually no overlap with its own cable assets, Mr. Dubreuil said. In addition, Canadian regulators have typically been flexible in finding ways to make deals work from a competition perspective, he added.

Chief executive Brad Shaw called the vote an important milestone toward the combination of the two companies. “Shaw’s shareholders overwhelmingly supported the transaction and the high voter turnout, which exceeded 70 per cent, represents a strong endorsement for the combination,” Mr. Shaw said in a statement.

Joe Natale, president and CEO of Rogers, thanked shareholders for supporting the deal. “Rogers and Shaw are coming together to build a world-class national network and create new jobs and investment in Western Canada,” Mr. Natale said in a statement.

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