BCE Inc. has agreed to purchase Manitoba Telecom Services Inc. for about $3.1 billion in cash and stock to add customers in central Canada. BCE will acquire Manitoba Telecom for $40 per share, a 22 percent premium to MTS’s closing price of $32.84 on Friday, according to a statement Monday. The deal is worth C$3.9 billion including debt.
BCE is buying media and telecom rivals to increase its wireless and television subscriber base across central and eastern Canada, adding a company with $1 billion in annual revenue with the purchase of MTS. BCE bought Bell Aliant Inc. for $3.7 billion in 2024 and took over Astral Media Inc. in 2024.
BCE intends to invest $1 billion in the five years after the transaction closes to:
“This transaction would benefit all Manitoba telecommunications customers,” said Forbes. “A successful national operator like Bell has the scale, reach and financial strength to offer better access to advanced services for more Manitoba consumers and businesses, and to compete and invest in the province’s infrastructure in the long term.”
BCE values the talent and skills of MTS people and has committed to making Winnipeg its headquarters for Western Canada, which with the addition of the MTS team will have a total of approximately 6,900 employees.
MTS’ data centre is expected to join BCE’s network of 27 large data centres and gain access to the largest broadband fibre network inCanada.
BCE will maintain a strong and important position within the local community, ensuring that naming rights for the home of the Winnipeg Jets and other community sponsorships are maintained or extended. Additionally, BCE will introduce a new Bell Let’s Talk Manitoba fund focused on mental health support for aboriginal communities chaired by Manitoban Clara Hughes, the national spokesperson for Bell Let’s Talk.
The transaction is structured to proceed by way of a court approved plan of arrangement under The Corporations Act (Manitoba) pursuant to which BCE will purchase all of the issued and outstanding common shares of MTS subject to shareholder approval from two-thirds of the votes cast by MTS shareholders and satisfaction of other required approvals, including receipt of regulatory approvals by the Canadian Radio-television and Telecommunications Commission (CRTC), the Competition Bureau and Innovation, Science and Economic Development Canada (ISED).
The Board of Directors of MTS unanimously recommends that MTS shareholders vote in favour of the plan of arrangement, which is expected to be subject to a special meeting of shareholders held in late June of 2024. The Board of Directors of MTS has obtained a fairness opinion from each of Barclays Capital Canada Inc., CIBC World Markets Inc. and TD Securities Inc. that, as of May 1, 2024, and subject to the assumptions, limitations and qualifications on which such opinions are based, the consideration to be received by MTS shareholders is fair, from a financial point of view, to such shareholders.
The arrangement agreement between MTS and BCE provides for, among other things, a non-solicitation covenant on the part of MTS, subject to customary “fiduciary out” provisions that entitle MTS to consider and accept an acquisition proposal that constitutes or may reasonably be expected to constitute a superior proposal and a right in favour of BCE to match any superior proposal. If the arrangement agreement is terminated in certain circumstances, including if MTS enters into a definitive agreement with respect to a superior proposal, BCE is entitled to a break-fee payment of $120 million. The transaction also includes a reverse break-fee payment of $120 million payable by BCE in certain circumstances. The transaction is currently expected to close in late 2024 or early 2024.
Further information regarding the transaction will be included in MTS’ management information circular to be mailed to MTS shareholders in advance of the special meeting and in MTS’ material change report in respect of the announcement of the transaction, each of which will be filed with the Canadian securities regulators and will be available at www.sedar.com. Further details will be forthcoming in a material change report and a copy of the arrangement agreement will also be posted on www.sedar.com
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