The European Commission on Wednesday rejected the proposed merger of European mobile phone firms Three UK and O2, which was the target of an investment by five large institutional investors, including two from Canada.
The C$282.6 billion ($225.1 billion) Canada Pension Plan Investment Board, Toronto, and the C$248 billion Caisse de Depot et Placement du Quebec, Montreal, is part of the group that said in May 2015 it would invest a combined £3.1 billion ($4.5 billion) for a 33% stake in Three UK once the merger was finalized.
The investment was through Three UK’s operator, CK Hutchison, formerly known as Hutchison Whampoa.
CPPIB, which manages assets for the Canada Pension Plan, Ottawa, had said it would invest £1.1 billion; according to Caisse’s 2015 financial statements, the manager of Quebec pension and other public assets planned to invest C$32 million.
The commission blocked the proposed acquisition of O2 by CK Hutchison because of “strong concerns that U.K. mobile customers would have had less choice and paid higher prices as a result of the takeover, and that the deal would have harmed innovation in the mobile sector,” according to a news release from the EC.
Dan Madge, spokesman for CPPIB, said the board had been notified of the ruling. “While CPPIB believes the proposed merger is in the public interest, we respect the commissioner’s ruling. We have no further comment at this time,” Mr. Madge said.
Officials at Caisse could not be immediately reached for comment.
In a news release on its website, CK Hutchison said it would consider its options, including a possible legal challenge to the ruling.
Other investors were the $300 billion Singapore sovereign wealth fund GIC, Abu Dhabi Investment Authority subsidiary Limpart Holdings and Sao Paulo-based investment banking and money management firm BTG Pactual.