By Maiya Keidan and Nell Mackenzie

TORONTO/LONDON (Reuters) - As one of Canada's most bitterly contested acquisitions nears the finish line, a dozen hedge funds including Citadel and Millennium Management are heaving a sigh of relief and sitting on profit of more than C$216 million ($162 million) on paper after a nearly two-year roller coaster ride.

Prospects for Rogers Communications Inc's C$20 billion bid for Shaw Communications Inc brightened after Canada's competition bureau this week dropped plans to block the deal. While the Canadian government still has the final say, most analysts and competition lawyers expect the deal to clear the last hurdle and close by the Jan. 31 deadline.

Rogers' bid faced antitrust risk from the start as the country's top three telecoms operators account for 80% market share. Still, hedge funds piled into Shaw, betting the deal would go ahead.

Hedge funds that bet on mergers and acquisitions aim to make money by buying shares in a company that is the target of a takeover bid in the hope they will rise towards the offer price.

Publicly available data does not show exactly when the funds moved into the stock - some may have held the stock long before the transaction was announced and stuck with it, granting them an even bigger payday.

The ride over the past two years wasn't one for the faint-hearted as the competition bureau battled to keep the transaction from going through, taking its case to Canada's antitrust tribunal and a Federal Court of Appeal.

But now, together, the 12 hedge fund firms have made hundreds of millions over the nearly two-year period between Mar. 15, 2021 - when the deal was announced - and Tuesday, when the competition bureau dropped its attempts to block the merger, according to Reuters' calculations using Refinitiv Eikon data. The shares have risen 18% since the deal was first announced.

Billionaire Israel Englander's Millennium, the hedge fund with the largest position in Shaw, would have made a C$44 million profit from its 7.59 million shares if it had held the number of shares it currently holds for the full two years, according to Reuters calculations.

A spokesperson for Millennium declined to comment.

Kenneth Griffin's Citadel and 10 other hedge funds, including Canyon Capital Advisors, Pentwater Capital Management and Britain's Sand Grove Capital Management, were among the firms that bet on the deal succeeding in spite of many hurdles.

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The 12 hedge fund firms together owned 7.05% of Shaw's shares, or 33.6 million shares, according to Refinitiv Eikon data.