(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.
TD Securities said in a note on Monday that the odds are now high that Edward Rogers and his supporters have enough voting support to take control of the board of Rogers Communications and thus make meaningful changes to senior management, as it cut the stock price target by 10% to C$69.00.
“As much as we like the assets and the improving momentum at Rogers ... we believe it is necessary to implement a discount on our target price related to this uncertainty on the go-forward management team,” the note added.
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” saying the corporate governance issues at Rogers is yet another reminder to investors of the differences between rivals BCE Inc and Telus and family-controlled entities with dual-class capital structures.
Rogers' shares were down 4.9% in afternoon, taking their year-to-date decline to 3.7%, while the broader market was up 0.4%. In contrast, Telus shares have climbed 11.1% so far this year, while BCE has risen 16%.
Reporting by Moira Warburton and Eva Mathews in Bengaluru; Writing by Denny ThomasEditing by Mark Porter, Shounak Dasgupta and David Evans