Canadian telcos Bell and Rogers Communications have agreed to acquire a 75% stake in the Canadian entertainment/sports company Maple Leaf Sports and Entertainment (MLSE) in a deal worth over C$1bn (US$988m).
The telcos will acquire the stake from the…
Canadian telcos Bell and Rogers Communications have agreed to acquire a 75% stake in the Canadian entertainment/sports company Maple Leaf Sports and Entertainment (MLSE) in a deal worth over C$1bn (US$988m).
The telcos will acquire the stake from the Ontario Teachers Pension Plan.
The transaction is expected to close in mid-2012.
Rogers said that its net cash commitment for the deal, following a planned leveraged recapitalisation of MLSE, will be C$533m (US$521m).
Bell, which is a subsidiary of Bell Canada Enterprises (BCE), will acquire a 28% stake in MLSE for C$398m. Bell said that it has a co-investment arrangement with the BCE Master Trust Fund. The independent trust that manages the pension plans of BCE Group pension holders will contribute C$135m (US$132m) for the transaction.
Together, Bell Communications and BCE Master Trust Fund will pay C$533m (US$521m) for a 37.5% stake in MLSE.
Meanwhile, Kilmer Sports Inc. (KSI), an investment company owned by Canadian businessman Larry Tanenbaum, will increase its stake in MLSE from 20.5% to 25%.
Tanenbaum will stay on as the chair of MLSE, as well as a governor for the three sports leagues (NHL, NBA and Major League Soccer).
MLSE owns four Toronto-based sports teams and is also invested in three digital TV sports channels.
Bell said that the MLSE deal would strengthen the “sports leadership” of its broadcaster, Bell Media.
Rogers said that the deal advanced its strategy to deliver content on any platform through its broadband and wireless networks, as well as its media assets.
Telcos acquiring sports teams is not new in Canada. Rogers already owns the Toronto Blue Jays baseball team and has media agreements with various other sports teams.
Earlier in 2011, BCE acquired the Canadian broadcaster CTVglobemedia for C$1.3bn.
Ronald Gruia, principal analyst at Frost & Sullivan, commented that both telcos were keen to get more content for their media operations on the basis that “content is king”.
