(Corrects second paragraph show BCE is based in Montreal, not
By Euan Rocha and Alastair Sharp
TORONTO, July 23 Canada's largest telecom
company, BCE Inc , said on Wednesday it will pay
C$3.95 billion ($3.68 billion) to take regional telecom Bell
Aliant private, buying the 56 percent stake it does not
already own to cut expenses and bolster its offerings in
Montreal-based BCE said the deal will result in C$100
million in annual cost savings, partly due to the elimination of
duplicate public company costs.
"Privatizing Bell Aliant within BCE supports our dividend
growth model and capital investment strategies," Siim Vanaselja,
BCE's chief financial officer, said in a statement, adding that
BCE will also maintain its investment-grade credit ratings
following the expected close of the deal in late November.
BCE, which already controls about 44 percent of Bell Aliant,
said the deal values the remainder at C$31 a share, a premium of
10 percent to the stock's close on Tuesday.
Shareholders of Bell Aliant, which also offers services in
rural Ontario and Quebec, can elect to receive either C$31 in
cash, or 0.6371 of one BCE share, or C$7.75 in cash and 0.4778
of one BCE share for every share they own, the companies said in
a joint statement.
Shares in BCE were up 0.8 percent at C$49.39 at midmorning
on Wednesday on the Toronto Stock Exchange, while Bell Aliant
shares jumped more than 10 percent to sit just above BCE's offer
price at C$31.17.
BCE competes with Rogers Communications Inc and
Quebecor Inc in Eastern Canada for phone, Internet and
TV customers, while sharing a national wireless network with
Western Canada-focused Telus Corp.
The company, which operates under the Bell name, will fund
the deal with available cash, and it will issue about 61 million
shares to fund the equity portion. It said cash will cover a
quarter of the purchase, and stock the rest.
The board of Bell Aliant has unanimously advised investors
to back the deal on the recommendation of its financial
advisers, Scotia Capital and Barclays Capital Canada.
The takeover will need approval from Canada's Competition
Bureau, but it will not need approvals from regulators such as
the Canadian Radio-Television and Telecommunications Commission
and Industry Canada as there is no change in control of Bell
Aliant, and no transfers of wireless spectrum licenses, the
"The consideration appears to be fairly valued given the way
shares are trading in the telecom space and we see few issues
with regulatory approvals related to the completion of the
transaction," said Desjardins Capital analyst Maher Yaghi in a
note to clients.
BCE said it plans to invest C$2.1 billion across Atlantic
Canada over the next five years to enable the continued rollout
of broadband wireline and wireless for consumers and business
It said the next phase of the buildout of its 4G LTE
network, which offers high-speed wireless services, will be in
Atlantic Canada, with more than 100 small towns and rural
locations across the region benefiting from enhanced mobile
service by the end of 2015.
BCE said the deal will also enhance Bell Aliant's ability to
develop its broadband Internet and TV services in the Atlantic
region, as well as strengthen next-generation business services
such as data hosting and cloud computing.
(Additional reporting by Ashutosh Pandey in Bangalore; Editing
by Savio D'Souza; and Peter Galloway)