MONTREAL – Bell Canada is buying national consumer electronics retailer The Source, the companies announced Monday.
While the purchase price was not released, Bell said it would be "materially less" than the $335 million paid for the chain by Circuit City in 2004. (The Source was once Radio Shack in Canada but was forced to drop the name in a branding dispute prior to its sale to the now-bankrupt Circuit City.)
The 750 Source stores will offer the full array of Bell consumer services – including Bell home phone products, Bell Mobility, Solo Mobile, potentially Virgin Mobile wireless products and services, Bell TV, and Bell Internet, by January 2010. While the rest of the consumer electronics products will remain, other communications brands will be shuffled out, the company said during a conference call with telecom analysts to explain the deal.
The Source earned revenues of $643 million in 2008 with EBITDA of $27 million. The chain has 3,000 employees and had 80 million shoppers through its doors last year. Bell says 70% of Canadians live within five kilometre of a Source location.
"With its strong national presence, brand, and management team, acquiring The Source represents a competitive and cost-effective approach to ensuring Bell’s leadership in delivering the best communications products to Canadians," said George Cope, president and CEO of Bell and BCE, in the statement. "Expanding the number of places people can buy Bell products is a core element in the execution of Bell’s strategy to achieve our goal: To be recognized by customers as Canada’s leading communications company."
The deal will also see Bell more than double the number of retail outlets it has (currently 723), vaulting it ahead of both Telus (approximately 800 stores) and Rogers (about 1,100).
Following its acquisition, The Source will operate independently from Bell and will also continue to sell its own communications, computing and audio products. Former CEO Ron Cuthbertson will also be brought back in to run the chain.
The Source was acquired by Circuit City Stores in March 2004. On November 10, 2008, Circuit City and some of its U.S. subsidiaries filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code.
Subject to approvals, the transaction is expected to close in the third quarter of 2009.
