MONTREAL and WINNIPEG – BCE Inc. is buying Manitoba Telecom Services (MTS) in a transaction valued at $3.9 billion, the companies announced early Monday.
The combined company's Manitoba operations will be known as Bell MTS, recognizing the power of the MTS brand in the province. Winnipeg becomes Western Canada headquarters for Bell and, with the addition of MTS's 2,700 employees, Bell's Western team grows to 6,900 people.
Bell pledged to invest $1 billion in capital throughout Manitoba after the transaction closes to extend the availability of its Gigabit Fibe Internet, rollout Fibe TV and expand its LTE wireless network. MTS' data centre is expected to join BCE's network of 27 large data centres and gain access to the largest broadband fibre network in Canada.
“Welcoming MTS to the Bell group of companies opens new opportunities for unprecedented broadband communications investment, innovation and growth for urban and rural Manitoba locations alike. Bell is excited to be part of the clear growth opportunities in Manitoba, and we plan to contribute new communications infrastructure and technologies that deliver the latest wireless, Internet, TV and media services to residents and businesses throughout the province," said BCE and Bell Canada president and CEO George Cope, in the news release. "Bell and MTS have a shared legacy of service and innovation that spans more than a century. We are honoured to join with the MTS team in this all-Canadian transaction to deliver the benefits of new infrastructure investment, technology development and the best of broadband communications to Manitobans."
"This transaction recognizes the intrinsic value of MTS and will deliver immediate and meaningful value to MTS shareholders, while offering strong benefits to MTS customers and employees, and to the Province of Manitoba," added MTS president and CEO Jay Forbes. "We are proud of our history and what we have achieved as an independent company. We believe the proposed transaction we are announcing today with BCE will allow MTS to build on our successful past and achieve even more in the future."
As part of the deal (likely a nod to competitive concerns) BCE and Telus have reached an agreement in principle with that will see approximately one-third of MTS' postpaid wireless customers become Telus customers once the purchase of MTS by BCE concludes. In addition, Bell will also assign one-third of MTS' dealer locations in Manitoba to Telus. (See slide below)
"This transaction with Telus enhances wireless competition to the benefit of Manitobans while reducing the cost of our acquisition of MTS," added Cope.
The Bell-Telus transaction is subject to regulatory approvals and customary closing conditions, and the Bell-MTS transaction is not conditional on completion of the Bell-Telus transaction.
BCE will acquire all issued and outstanding common shares of MTS for approximately $3.1 billion and assume outstanding net debt of approximately $0.8 billion. MTS shareholders will receive $40.00 per share, in combination of cash and BCE shares.
The agreement between BCE and MTS provides for a non-solicitation covenant on the part of MTS and a right in favour of BCE to match any superior proposal. If BCE does not exercise its right to match, BCE would receive a termination fee of $120 million in the event the agreement is terminated as a result of a superior proposal. The transaction also includes a reverse break-fee payment of $120 million payable by BCE in certain circumstances.
The deal, unanimously approved by the boards of directors of both companies, is subject to customary closing conditions, including court, shareholder, and regulatory approvals including Innovation, Science and Economic Development Canada (formerly Industry Canada), Competition Bureau and CRTC. It is currently expected to close in late 2016 or early 2017.
