Bell To Divest 50% Stake In Glentel To Rogers Communications

(RTTNews) - Canadian communications company BCE Inc (BCE, BCE.TO) on Wednesday said it would divest 50% of its ownership stake in wireless retailer Glentel Inc (GLN.TO) to Rogers Communications Inc (RCI, RCI_A.TO, RCI_B.TO) following the closing of Bell's acquisition of GlentelL, expected in the first half of 2015.

Under the agreement, Bell and Rogers will each own 50% of Glentel shares representing 50% of Glentel's retail operations. In exchange, Rogers has agreed to pay in cash to Bell 50% of the Glentel transaction value following the successful closing of Bell's Glentel acquisition. In addition, Rogers will withdraw its application for an injunction to block Bell's acquisition of Glentel.

As announced on November 28, 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 $594 million. This represents a premium of 108% based on Glentel's closing share price on the TSX on November 27 and a 121% premium to the volume weighted trading average share price on the TSX for the 10 trading days prior to November 28. Including net debt and minority interest of nearly $78 million, the total enterprise value of Glentel is about $670 million.

"Providing continued access to Glentel's first-class wireless retail operations for both competitors, this agreement greatly reduces Bell's cost to acquire Glentel and helps ensure the transaction closes as scheduled to the benefit of Glentel shareholders," said George Cope, CEO of BCE Inc and Bell Canada. "Glentel's distribution scope and renowned service and sales capabilities remain key to Bell's strategy to accelerate wireless in Canada while delivering an improved customer experience."

Headquartered in Burnaby, BC and operating as a standalone entity with independent management, Glentel will continue with its strategy of offering competing dual-carrier wireless brands to Canadian consumers and business customers. Bell's agreement with Rogers does not impact the Glentel acquisition timeline or plan of arrangement, and closing of Bell's Glentel acquisition is not dependent on the closing of Bell's transaction with Rogers.

The Board of Glentel, acting on the unanimous recommendation of the Special Committee, has unanimously approved the Glentel/Bell arrangement transaction and recommends that Glentel shareholders vote in favour of it. The Skidmore family, which owns approximately 37% of the common equity of Glentel, supports the transaction.

A special meeting of Glentel shareholders is scheduled for January 12, 2015 and the transaction is expected to be completed by the end of the first quarter of 2015.