Telecoms and DTH giant Bell Canada Enterprises (BCE) has formally commenced its offer to purchase all the issued and outstanding common shares of fibre operator Bell Aliant.
BCE announced in late July that it had agreed a deal to buy out the public…
Telecoms and DTH giant Bell Canada Enterprises (BCE) has formally commenced its offer to purchase all the issued and outstanding common shares of fibre operator Bell Aliant.
BCE announced in late July that it had agreed a deal to buy out the public shareholders in Bell Alliant for around C$3.95bn (US$3.68bn) and then take the company private. BCE owns 44% of Bell Alliant but exercises managing control of the business.
BCE is offering those shareholders the choice of C$31 in cash for each of their shares, 0.6371 of a BCE share, or C$7.75 in cash and 0.4778 of a BCE share.
BCE’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.
BCE 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.
Concurrent with the common share offer, BCE also initiated its offer to exchange all of the preferred shares of Bell Aliant Preferred Equity Inc. (Prefco) for newly issued preferred shares of BCE, with the same financial terms as the existing preferred shares.
Both offers will expire on 19 September unless extended or withdrawn by BCE.
BCE 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.
The group added that taking Aliant private simplified the company’s structure, eliminating redundant public company costs and increasing overall operational efficiency.
BCE expects to generate C$100m in annual pre-tax annual synergies from the transaction.
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.
Having obtained competition act clearance for the privatisation on 5 August, BCE has now met all the regulatory conditions required to complete the offer. The transaction is expected to close by the end of November
Founded in 1999, Aliant operates throughout Eastern Canada offering broadband, fixed-line telephony and IPTV services.
