Canadian incumbent operator BCE has agreed to buy Glentel, the country’s largest independent mobile phone retailer, for C$594m (US$520m) in cash and stock.
The deal gives Glentel an enterprise value of C$670m (US$587m) when its net debt and a minority…
Canadian incumbent operator BCE has agreed to buy Glentel, the country’s largest independent mobile phone retailer, for C$594m (US$520m) in cash and stock.
The deal gives Glentel an enterprise value of C$670m (US$587m) when its net debt and a minority interest in the company is taken into account.
BCE will fund the cash portion using available liquidity and plans to issue 5.6 million common shares to fund the equity component.
Glentel shareholders can receive either C$26.50 in cash or 0.4974 of a common BCE share for each of their common shares in the target. BCE said the price represents a 121% premium to Glentel’s average share price on the Toronto Stock Exchange prior to the deal.
Explaining the rationale for the deal, BCE’s president and CEO George Cope said: “Glentel’s national reach, deep product knowledge, and great customer service and sales execution are key to our strategy to accelerate wireless.”
The Skidmore family, which owns roughly 37% of Glentel’s common equity, has already committed to support the transaction following a fairness consideration by Canaccord Genuity, financial adviser to Glentel’s special committee.
Tom Skidmore, Glentel’s president and CEO, said the deal would provide additional value to its shareholders and employees.
The agreement between the companies includes a non-solicitation covenant on the part of Glentel, and a right in favour of BCE to match any superior proposal it receives. If BCE does not exercise this right to match, it will receive a termination fee of C$33.6m if Glentel supports another proposal.
Glentel runs 494 retail outlets across Canada and offers wireless products and services from a number of telcos including BCE’s Bell Canada subsidiary. It also sells products and services from Rogers Wireless and its brands Chatr and Fido, plus regional operator SaskTel and MVNO Virgin Mobile.
Under the deal, Glentel will continue to sell services from Bell’s rivals. Glentel has agreed to pay a C$33.6m reverse break fee if the transaction cannot be closed for antitrust reasons. BCE needs court, shareholder and competition approvals and hopes to close the transaction by the end of Q1 2015.
Owen Bird Law Corp acted as Glentel’s legal adviser, while Blake, Cassels & Graydon and Sullivan & Cromwell served as BCE’s legal counsel.
Glentel also has operations outside of Canada. The distributor owns, operates, and franchises about 735 retail locations in the United States, and 147 points of sale in Australia and the Philippines.
BCE’s announcement of the deal comes just weeks after its closed the privatisation of fixed-line operator Bell Aliant, which serves customers in eastern Canada.
That deal followed the closure of BCE’s acquisition to buy local broadcaster Astral Media, which took 15 months to close due to regulatory concerns.
Montreal-headquartered BCE describes itself as “Canada’s largest communications company”. It offers mobile, fixed-line, broadband and DTH services. It also owns a large portfolio of multimedia assets in TV, radio and digital media.