The Canadian market is about to see some significant consolidation. BCE, which owns the dominant incumbent Bell Canada as well as various media properties, has entered into an agreement to buy its smaller neighboring incumbent Manitoba Telecom Services, better known as MTS.
The deal is valued at approximately CAN$3.9B, paying $40 a share in a combination of cash and stock — a premium of some 23% above recent levels and at about 10.1 times 2016 estimated EBITDA. It has been backed by both boards and management teams, so all it needs now is regulatory approval.
That will be eased by the fact that MTS doesn’t overlap as much with BCE anymore. MTS just sold its national Allstream business to Zayo over the winter, a divestment it had been working on for years. Having finally completed that piece of the puzzle, MTS was apparently quite ready to take the final step. But it still won’t be a walk in the park with regulators, and BCE is already offering to transfer/sell 1/3 of the acquired mobile subscribers and dealer locations to its rival Telus.
One might be tempted to see this as a bit of an echo of the reassembly of Ma Bell here in the USA with Verizon, AT&T, and CenturyLink, but the history of this one goes back further. Manitoba bought the early form of MTS from Bell Canada way back in 1908, so while this is a bit of a reunion it’s after more than a century apart.
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