Incumbent telco Bell Canada has agreed a deal to absorb fibre operator Bell Aliant for C$31 (US$29) per share, made up of cash and Bell Canada stock.
The offer would amount to C$3.95bn (US$3.68bn) if all of Aliant’s public minority investors sold…
Incumbent telco Bell Canada has agreed a deal to absorb fibre operator Bell Aliant for C$31 (US$29) per share, made up of cash and Bell Canada stock.
The offer would amount to C$3.95bn (US$3.68bn) if all of Aliant’s public minority investors sold their 127.5 million shares to Bell, which already controls the target and holds 44% of the operator’s stock.
Bell’s offer values Aliant at 8.3x LTM EBITDA and represents an 11.6% premium on Aliant’s 20-day volume weighted average price of C$27.78.
Bell said it will fund the cash portion of the consideration using available sources of liquidity, and will issue up to 61 million new common shares for the equity component.
Aliant shareholders can choose to receive either C$31 in cash for each of their shares, 0.6371 of a Bell share, or C$7.75 in cash and 0.4778 of a Bell share. The share calculation is based on Bell’s 10-day volume weighted average price of C$48.66.
Bell CEO George Cope said: “Privatising Bell Aliant enhances our broadband investment strategy and capital markets objectives while delivering great value to the public minority shareholders who have supported Bell Aliant’s success.”
Bell said the offer was attractive to Aliant’s shareholders as it exposed them to its “superior dividend growth potential”. Its dividend has been increased 10 times since Q4 2008, representing an aggregate increase of 69%, and delivers a 5% yield.
Bell said taking Aliant private simplified the company’s structure, eliminating redundant public company costs and increasing overall operational efficiency.
Edward Reevey, Aliant’s lead independent director, described the transaction as the “next logical step” for the company.
“A special committee of independent directors of Bell Aliant has conducted a thorough review of the offer and has unanimously concluded that the transaction provides attractive value to Bell Aliant’s public minority shareholders, while also providing them with an opportunity to participate in the future growth of [Bell Canada],” Reevey said.
The committee was advised by Scotia Capital and Barclays Capital Canada. As the independent valuator, Barclays concluded that the fair market value of the Aliant common shares is between C$27 and C$31.50 per share.
Bell said it will generate C$100m in annual pre-tax annual synergies from the transaction, which it expects to finalise by the end of November, subject to more than 50% of the Aliant shares held by minority investors being tendered.
The transaction does not need regulatory and governmental approval as there is no change in control of the business.
Aliant operates out of Saint John, New Brunswick and offers broadband, fixed-line telephony and IPTV in eastern Canada.
Bell is the incumbent operator in most of Canada and also owns a substantial part of the country’s media. It has a market capitalisation of C$38bn.
