Telecom giants lock horns with billionaire over sale of stake
Rogers Communications Inc. (Rogers) and Bell Canada Enterprises Inc. (Bell) have launched a challenge against billionaire Larry Tanenbaum's planned sale of a stake in the parent company of the Toronto Maple Leafs and Toronto Raptors to a pension plan, setting the stage for a potential battle over control of a sports empire.
Last month, Tanenbaum informed Rogers and Bell that he intended to sell a 20% stake in Kilmer Sports Inc., a family-controlled holding company, to the Ontario Municipal Employees Retirement System (OMERS) pension plan for $400 million. Kilmer Sports owns 25% of Maple Leaf Sports and Entertainment (MLSE), with Tanenbaum serving as the chairman. Rogers and Bell jointly own the remaining 75% through a shared holding company.
Sources familiar with the matter revealed that Bell and Rogers sent a joint letter to Tanenbaum, raising concerns about the proposed sale. However, the specific details of their concerns were not disclosed. The sources were not authorized to speak on behalf of the companies, as reported by The Globe and Mail.
Representatives for Tanenbaum, OMERS, and Rogers declined to comment, while there was no response from Bell regarding the issue.
MLSE is the owner of professional hockey, basketball, soccer, and Canadian Football League teams in Toronto. The planned transaction with OMERS values MLSE at $8 billion, which would make Tanenbaum's MLSE holding worth $2 billion. Tanenbaum, aged 78, has stated that he intends to sell to OMERS as part of his estate planning.
Rogers and Bell initially invested in MLSE in 2012, acquiring a majority stake for $1.32 billion. As part of the agreement, the telecom companies secured the right to purchase Tanenbaum's MLSE shares in 2026 at a price to be determined.
Industry experts predict that both Rogers and Bell will eventually buy out Tanenbaum, as neither company wants its rival to gain control of MLSE.
According to a previous The Globe and Mail report, Tanenbaum's deal with OMERS places a higher value on his MLSE stake than anticipated by Rogers and Bell. This development further complicates MLSE's ownership structure in anticipation of a potential buyout of Tanenbaum.
Both Rogers and Bell leverage their ownership of sports teams to enhance their brand presence and promote their wireless and wireline services. The value of their stakes in MLSE has more than tripled over the past 11 years.
This battle for ownership of MLSE unfolds amidst soaring valuations of professional sports teams, driven by increased revenues from broadcasters and gambling, as reported by The Globe and Mail.
Rising broadcast fees and the legalization of sports gambling in Ontario have contributed to MLSE's financial growth. MLSE recently partnered with PokerStars and FanDuel, subsidiaries of Flutter Entertainment plc, the world's largest sports betting service.
