BCE Inc. (BCE.TO,BCE), Canada's largest communications company, has agreed to acquire Canada-based multi-carrier mobile products distributor Glentel Inc. (GLN.TO) for C$594 million, or $520.3 million, in cash and stock, the two companies said Friday. Including net debt and minority interest of about C$78 million, the total enterprise value of Glentel is about C$670 million.
BCE noted that the transaction will enhance Bell's strategy to accelerate wireless and improve customer service in a competitive wireless marketplace, while providing additional value to Glentel's shareholders.
Burnaby, British Columbia-based Glentel operates 494 retail locations across Canada offering wireless products and services from Bell Mobility, Chatr, Fido, Rogers Wireless, SaskTel and Virgin Mobile. The company plans to continue offering products from multiple carriers following the acquisition.
Outside Canada, Glentel owns, operates, and franchises about 735 retail locations in the U.S., as well as 147 points of sale in Australia and the Philippines.
The transaction is expected to close by the end of the first quarter of 2015.
George Cope, President and CEO of BCE Inc. and Bell Canada said, "As our longstanding partner, the Glentel team shares Bell's commitment to wireless growth and service innovation, and we are proud to welcome them. Glentel's national reach, deep product knowledge, and great customer service and sales execution are key to our strategy to accelerate wireless."
BCE provides broadband communication services to residential and business customers under the Bell and Bell Aliant brands. Under the deal, Bell will acquire all of Glentel's about 22.4 million fully-diluted common shares, for a total consideration for Glentel's equity of about C$594 million.
Glentel shareholders may elect to receive either C$26.50 in cash, or 0.4974 of a common BCE share, for each Glentel common share held by them. This represents a 108 percent premium based on Glentel's closing share price of C$12.75 on the Toronto Stock Exchange on November 27, 2014.
BCE noted that the consideration for the transaction will consist of a combination of 50 percent cash and 50 percent in its own common shares. The company will fund the cash component with available liquidity and expects to issue about 5.6 million BCE common shares to fund the equity component.
Glentel's board of directors has approved the transaction and recommended that Glentel shareholders vote in favor of the deal. The Skidmore family, holding about 37 percent of Glentel's common stock, has entered into agreements with Bell supporting the deal.
The agreement between Bell and Glentel provides for a non-solicitation covenant on the part of Glentel and a right in favor of Bell to match any superior proposal. If Bell does not exercise its right to match, it would receive a termination fee of C$33.6 million in the event Glentel supports any superior offer.
However, Bell would be required to pay a reverse break fee of C$33.6 million to Glentel if the transaction does not close due to competition approval reasons. Glentel said it has agreed not to declare or pay dividends on its shares through to the closing date.
On the NYSE, BCE is currently trading at $47.07, up $0.03 or 0.06 percent on a volume of 91,921 shares.
On the Toronto Stock Exchange, GLN.TO is trading at C$26.15, up C$13.40 or 105.10 percent on a volume of 113,898 shares.
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