This news release contains forward-looking statements. For a
description of the related risk factors and assumptions, please see
the section entitled "Caution Concerning Forward-Looking
Statements" later in this release.
- Transaction enterprise value of approximately $3.9 billion: BCE to acquire all issued and
outstanding common shares of MTS for approximately $3.1 billion and assume outstanding net debt of
approximately $0.8 billion
- $40 per common share value
represents a significant premium for MTS shareholders; transaction
unanimously recommended by the MTS Board of Directors
- Bell MTS team will serve customers across Manitoba, Winnipeg head office will become Bell's
Western Canada headquarters
- $1-billion, 5-year capital
investment commitment to expand broadband wireless and wireline
networks in urban and rural locations throughout Manitoba
- Free cash flow accretion supports Bell's broadband leadership
strategy, dividend growth objective
MONTRÉAL and WINNIPEG,
May 2, 2016 /CNW Telbec/ - BCE Inc.
(Bell) (TSX: BCE) (NYSE: BCE) today announced that it will acquire
all of the issued and outstanding common shares of Manitoba Telecom
Services Inc. (MTS) (TSX: MBT) in a transaction valued at
approximately $3.9 billion.
"Welcoming MTS to the Bell group of companies opens new
opportunities for unprecedented broadband communications
investment, innovation and growth for urban and rural Manitoba locations alike. Bell is excited to
be part of the clear growth opportunities in Manitoba, and we plan to contribute new
communications infrastructure and technologies that deliver the
latest wireless, Internet, TV and media services to residents and
businesses throughout the province," said George Cope, President and CEO of BCE and
Bell Canada. "Bell and MTS have a
shared legacy of service and innovation that spans more than a
century. We are honoured to join with the MTS team in this
all-Canadian transaction to deliver the benefits of new
infrastructure investment, technology development and the best of
broadband communications to Manitobans."
Bell plans to invest $1 billion in
capital over 5 years after the transaction closes to expand its
broadband networks and services throughout Manitoba, including:
- Gigabit Fibe Internet availability, delivering Internet speeds
on average up to 20 times faster than those currently offered to
MTS customers, within 12 months after the transaction closes.
- the rollout of Fibe TV, Bell's innovative broadband television
service.
- accelerated expansion of the company's award-winning LTE
wireless network throughout the province, with average data speeds
twice as fast as those now available to MTS customers.
- integration of MTS's Winnipeg
data centre with Bell's existing national network of 27 data and
cloud computing centres, Canada's largest, and the country's most
extensive broadband fibre network footprint.
"This transaction recognizes the intrinsic value of MTS and will
deliver immediate and meaningful value to MTS shareholders, while
offering strong benefits to MTS customers and employees, and to the
province of Manitoba," said
Jay Forbes, President and CEO of
MTS. "We are very proud of what the MTS team has accomplished. Now,
enabled by Bell's national scale and commitment to broadband
investment, Bell MTS will be very well-positioned to accelerate
service innovation, customer support and community investment to
the benefit of Manitobans like never before."
The combined company's Manitoba
operations will be known as Bell MTS in recognition of the powerful
brand presence the MTS team has built across in the province.
Winnipeg becomes Western Canada headquarters for Bell and, with
the addition of MTS's 2,700 employees, Bell's Western team grows to
6,900 people.
Bell Media's TV, radio and digital platforms will continue to
offer opportunities for local artists and entertainers along with
ongoing support for the Winnipeg Jets and Winnipeg Blue Bombers on
the national TSN sports network and TSN Radio 1290 Winnipeg. Bell
Media assets in Manitoba also
include CTV Winnipeg, Virgin 103.1 and BOB FM 99.9 in the capital
city and BOB FM 96.1 and The Farm 101.1 in Brandon.
Bell MTS will continue the company's sponsorships and community
investments in Manitoba, including
a shared commitment to United Way and programs for students and new
grads, and launch a new Bell Let's Talk initiative supporting
aboriginal communities in Manitoba, to be chaired by Clara Hughes, Bell Let's Talk national
spokesperson and legendary Canadian Olympian who was born and
raised in Winnipeg.
Details of the transaction
"With its immediate free
cash flow accretion and significant operational synergies and tax
savings, the transaction fully supports Bell's broadband leadership
strategy and our dividend growth objective. The balanced
transaction financing structure maintains our strong
investment-grade balance sheet with substantial financial
flexibility," said Glen LeBlanc,
Executive Vice President and Chief Financial Officer of BCE and
Bell Canada. "Bell has proven
experience in completing similar transactions and successfully
integrating them into our national operations, as with Bell Aliant
in Atlantic Canada."
The transaction will be completed through a plan of arrangement
under which BCE will acquire all of the issued and outstanding
common shares of MTS for $40 per
share, which will be paid with a combination of BCE shares and
cash.
MTS shareholders will be able to elect to receive $40 in cash or 0.6756 of a BCE common share for
each MTS common share, subject to pro-ration such that the
aggregate consideration will be paid 45% in cash and 55% in BCE
common shares. The share consideration is based on BCE's 20-day
volume weighted average price of $59.21.
Creating significant immediate and long-term value for MTS
shareholders, the transaction values MTS at approximately 10.1 x
2016E EBITDA, based on the latest analyst consensus estimates, and
8.2x including tax savings and operational synergies. This
represents a 23.2% premium to the weighted-average closing share
price on the TSX for the 20-day period ending April 29, 2016. The offer price represents a 40%
premium to MTS's closing price of $28.59 on November 20,
2015, the business day prior to the announcement of the sale
of its Allstream business communications division.
As part of the agreement, MTS will not declare any further
dividends on its common shares after its upcoming second-quarter
2016 dividend, expected to be declared in May and paid in July.
Taxable Canadian shareholders who receive BCE shares as
consideration under the transaction will generally be entitled to a
roll-over to defer Canadian taxation on capital gains.
BCE will fund the cash component of the transaction from
available sources of liquidity and will issue approximately 28
million common shares for the equity portion of the transaction,
which offers MTS shareholders access to BCE's dividend growth
potential. The BCE dividend has been increased 12 times,
representing an aggregate increase of 87%, since Q4 2008 and
currently delivers an attractive 4.6% yield. When the transaction
is completed, MTS shareholders will own approximately 3% of pro
forma BCE common equity.
The Board of Directors of MTS has approved the transaction and
recommends that MTS shareholders vote in favour of it. TD
Securities, Barclays and CIBC World Markets, financial advisors to
the Board of Directors of MTS, provided an opinion that, as of the
date of the opinion and subject to the assumptions and limitations
stated therein, the consideration proposed to be received by MTS
shareholders is fair from a financial point of view.
The agreement between BCE and MTS provides for a
non-solicitation covenant on the part of MTS and a right in favour
of BCE to match any superior proposal. If BCE does not exercise its
right to match, BCE would receive a termination fee of $120 million in the event the agreement is
terminated as a result of a superior proposal.
Expected to close at the end of 2016 or early 2017, the
transaction will be effected through a plan of arrangement and is
subject to customary closing conditions, including court,
shareholder, regulatory approvals and other conditions set forth in
the transaction agreement, a copy of which is available under MTS's
SEDAR profile at Sedar.com. A reverse break fee of $120 million would be payable by BCE to MTS if
the transaction does not close in certain circumstances.
A proxy circular will be prepared and mailed to MTS shareholders
in the coming weeks providing important information about the
transaction. MTS shareholders are expected to vote on the
transaction in late June.
Call with financial analysts
A conference call for
financial analysts will be held Monday, May
2 at 8:30 am eastern time. To
participate, please dial 416-340-2216 or toll-free 1-866-223-7781
before the start of the call. A replay will be available for one
week by dialing 905-694-9451 or 1-800-408-3053, passcode
5493892.
A live audio webcast of the conference call will be available on
the BCE.ca and MTS websites. The mp3 file will be available for
download later today.
Caution concerning forward-looking statements
Certain
statements made in this news release are forward-looking
statements, including, but not limited to, statements relating to
the proposed acquisition by BCE Inc. ("BCE") of all of the issued
and outstanding common shares of Manitoba Telecom Services Inc.
("MTS"), the expected timing, impact and sources of funding of the
proposed transaction, certain strategic, operational and financial
benefits expected to result from the proposed transaction, our
network deployment and capital investment plans, BCE's dividend
growth objective, our business outlook, objectives, plans and
strategic priorities, and other statements that are not historical
facts. Forward-looking statements are typically identified by the
words assumption, goal, guidance, objective, outlook, project,
strategy, target and other similar expressions or future or
conditional verbs such as aim, anticipate, believe, could, expect,
intend, may, plan, seek, should, strive and will. All such
forward-looking statements are made pursuant to the "safe harbour"
provisions of applicable Canadian securities laws and of the United
States Private Securities Litigation Reform Act of 1995.
Forward-looking statements, by their very nature, are subject to
inherent risks and uncertainties and are based on several
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking statements. As a result, we cannot guarantee that
any forward-looking statement will materialize and we caution you
against relying on any of these forward-looking statements. The
forward-looking statements contained in this news release describe
our expectations at the date of this news release and, accordingly,
are subject to change after such date. Except as may be required by
Canadian securities laws, we do not undertake any obligation to
update or revise any forward-looking statements contained in this
news release, whether as a result of new information, future events
or otherwise. Forward-looking statements are provided herein for
the purpose of giving information about the proposed transaction
referred to above and its expected impact. Readers are cautioned
that such information may not be appropriate for other
purposes.
The completion and timing of the proposed transaction are
subject to customary closing conditions, termination rights and
other risks and uncertainties including, without limitation, court,
shareholder and regulatory approvals, including approval by the
Competition Bureau, the CRTC, Innovation, Science and Economic
Development Canada, as well as the TSX and NYSE. Accordingly, there
can be no assurance that the proposed transaction will occur, or
that it will occur on the terms and conditions, or at the time,
contemplated in this news release. The proposed transaction could
be modified, restructured or terminated. There can also be no
assurance that the strategic, operational or financial benefits
expected to result from the proposed transaction will be
realized.
For additional information on assumptions and risks underlying
certain forward-looking statements made in this news release
relating, in particular, to our network deployment and investment
plans, please consult BCE's 2015 Annual MD&A dated March 3, 2016 (included in the BCE 2015 Annual
Report) and BCE's 2016 First Quarter MD&A dated April 27, 2016, filed by BCE with the Canadian
provincial securities regulatory authorities (available at
Sedar.com) and with the U.S. Securities and Exchange Commission
(available at SEC.gov). These documents are also available at
BCE.ca.
Notice to U.S. shareholders of MTS Inc.
The transaction contemplated by this news release involves the
securities of Canadian companies and will be subject to Canadian
disclosure requirements that are different from those of
the United States. The BCE common
shares to be issued pursuant to the plan of arrangement described
herein will not be registered under the U.S. Securities Act of 1933
pursuant to an exemption from the registration requirements of such
Act. Financial statements included or incorporated by reference in
the Circular relating to the transaction will have been prepared in
accordance with Canadian accounting standards and may not be
comparable to the financial statements of U.S. companies.
About MTS
At MTS, we're proud to be Manitoba's leading information and
communications technology provider. We're dedicated to delivering a
full suite of services for Manitobans – Internet, Wireless, TV,
Phone Service and Security Systems plus a full suite of Information
Solutions, including Unified Cloud and Managed Services. You can
count on MTS to make connecting your world easy. We're with
you.
We live where we work and actively give back to organizations
that strengthen our communities. Through MTS Future First, we
provide sponsorships, grants and scholarships, value-in-kind
support and volunteer commitment in Manitoba.
MTS Inc. is wholly owned by Manitoba Telecom Services Inc. (TSX:
MBT). For more on MTS' products and services, visit mts.ca. For
investor information, visit mts.ca/aboutus.
About BCE
Canada's largest communications company, BCE
provides a comprehensive and innovative suite of broadband
wireless, TV, Internet and business communication services from
Bell Canada and Bell Aliant. Bell
Media is Canada's premier multimedia company with leading assets in
television, radio, out of home and digital media. To learn more,
please visit BCE.ca.
The Bell Let's Talk initiative promotes Canadian mental health
with national awareness and anti-stigma campaigns like Bell Let's
Talk Day and significant Bell funding of community care and access,
research, and workplace initiatives. To learn more, please visit
Bell.ca/LetsTalk.
Media inquiries:
Jean Charles Robillard
Bell Canada
(514) 870-4739
jean_charles.robillard@bell.ca
Investor inquiries:
Thane Fotopoulos
BCE
(514) 870-4619
thane.fotopoulos@bell.ca
SOURCE BCE Inc.