NEW YORK (The Deal) -- Canadian telecom giant BCE (BCE - Get Report) on Wednesday committed C$3.95 billion ($3.68 billion) to take Bell Aliant private in an effort to streamline its corporate structure and flush out duplicate costs.
Montreal-based BCE said it would pay C$31 in cash and stock for each of the 127.5 million shares of Bell Aliant it does not already own. BCE, which already owns about 44% of Bell Aliant, said post-deal holders of the target would own about 7% of the combination.
Halifax, Nova Scotia-based Bell Aliant has telecom customers in New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island and rural regions of Ontario and Quebec. Aliant was formed in 1999 from the merger of Maritime Telephone and Telegraph Co., Island Telecom, Bruncor Inc. and NewTel Enterprises, and has been affiliated with BCE and its predecessors since 2006.
This latest privatization offer was evaluated and recommended by independent directors of Bell Aliant with advice from Scotia Capital and Barclays Capital Canada. BCE said that as part of the deal it intends to invest C$2.1 billion across the Atlantic Canada region over the next five years to roll out broadband wireline and wireless services.
BCE chief executive George Cope in a statement called Bell Aliant "a core part of BCE's national communications operations," and said the combination should improve efficiency.
"Privatizing Bell Aliant enhances our broadband investment strategy and capital markets objectives while delivering great value to the public minority shareholders who have supported Bell Aliant's success," Cope said. "In line with our investment-focused strategic imperatives, BCE looks forward to continuing network and service innovation to benefit consumers and business customers across Bell Aliant's territory."
BCE already controls Bell Aliant, and the target's results are already consolidated within BCE's public financial and operating reporting. The company said that bringing Bell Aliant fully in-house would eliminate "redundant public company costs" and generate about C$100 million in pre-tax annual synergies.
BCE said it would fund the cash component of the deal from available sources and issue about 61 million common shares for the equity portion. The deal is expected to close by the end of November, subject to approval of more than 50% of Bell Aliant non-BCE owned shares.