Bell to acquire its mobile phone distributor GLENTEL

BCE Inc. (TSX, NYSE: BCE; Bell) and GLENTEL Inc. (TSX: GLN) announced last week that they have entered into a iphonedefinitive agreement whereby BCE will acquire all the issued and outstanding shares of GLENTEL, the Canadian-based multi-carrier mobile products distributor. Valued at about $670 million, the transaction enhances Bell’s strategy to accelerate wireless and improve customer service in a competitive wireless marketplace, while providing more value to GLENTEL shareholders.

“GLENTEL is a remarkable Canadian success story, and over the past 25 years has been influential in driving the widespread adoption of mobile services in Canada, the United States and elsewhere internationally. As our longstanding partner, the GLENTEL team shares Bell’s commitment to wireless growth and service innovation, and we are proud to welcome them,” said George Cope, President and CEO of BCE Inc. and Bell Canada. “GLENTEL’s national reach, deep product knowledge, and great customer service and sales execution are key to our strategy to accelerate wireless.”

“As GLENTEL considered its future opportunities, it was essential that our partner share in GLENTEL’s core values of Quality, Service and Integrity. Bell, who has been a long time significant contributor to GLENTEL’s success, is that partner. We are delighted that GLENTEL, together with Bell, will continue to deliver legendary customer service to its customers, and believe that this new relationship will give more value to our shareholders and employees,” said Tom Skidmore, GLENTEL President and CEO.

Headquartered in Burnaby, BC, GLENTEL operates 494 retail locations across Canada offering wireless products and services from Bell Mobility, Chatr, Fido, Rogers Wireless, SaskTel and Virgin Mobile, and plans to continue offering products from multiple carriers after the acquisition. Outside Canada, GLENTEL owns, operates, and franchises about 735 retail locations in the United States, as well as 147 points of sale in Australia and the Philippines.

“There are clear growth opportunities ahead in Canadian wireless. This includes the much increased number of mobile customers with two or three year service contracts who will be eligible to renew their plans and change carriers over the next two years, a result of the federal wireless code of conduct implemented in 2013. Bell is ready to compete for their business,” said Wade Oosterman, President of Bell Mobility. “Supporting Bell’s commitment to deliver improved customer service, this transaction secures continued access for consumers to the convenient, high-quality customer experience offered by GLENTEL retail brands.”

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. GLENTEL shareholders may choose to receive either $26.50 in cash, or 0.4974 of a common BCE share, for each GLENTEL common share, representing a premium of 108% based on GLENTEL’s closing share price on the TSX on November 27, 2014 and a 121% premium to the volume weighted trading average share price on the TSX for the past 10 days. The BCE share consideration is based on the 10-day volume weighted trading average share price on the TSX of $53.27.

Including net debt and minority interest of about $78 million, the total enterprise value of GLENTEL is about $670 million. The transaction consideration will consist of a combination of 50% cash and 50% in BCE common shares. Bell will fund the cash part with available liquidity and expects to issue about 5.6 million BCE common shares to fund the equity part. GLENTEL shareholders will be able to pick cash or share consideration and will be subject to proration should the total elections for cash or shares exceed the greatest available.

The Board of Directors of GLENTEL, acting on the unanimous recommendation of the Special Committee (which consisted solely of independent directors of GLENTEL), has approved the transaction and recommends that GLENTEL shareholders vote in favour of it. The Skidmore family, which owns about 37% of the common equity of GLENTEL, has entered into agreements with Bell supporting the transaction. Canaccord Genuity Corp., financial advisor to the Special Committee of the Board of Directors of GLENTEL, provided an opinion that as of the date of the opinion and subject to the assumptions and limitations stated there, the consideration proposed to be received by GLENTEL shareholders is fair from a financial point of view.

The agreement between Bell and GLENTEL provides for a non-solicitation covenant by GLENTEL and a right in favour of Bell to match any superior proposal. If Bell does not exercise its right to match, Bell would receive a termination fee of $33.6 million in the event GLENTEL supports any superior proposal.

Expected to close by the end of the first quarter of 2015, the transaction will be effected through a plan of arrangement and is subject to customary closing conditions, including court, shareholder and competition approvals. A reverse break fee of $33.6 million would be payable by Bell to GLENTEL should the transaction not close for competition approval reasons. GLENTEL has agreed not to declare or pay dividends on its shares through to the closing date. GLENTEL shareholders are expected to vote on the transaction in early 2015.

A proxy circular will be prepared and mailed to GLENTEL shareholders in the coming weeks providing important information about the transaction. A material change report will be filed with the Canadian securities regulatory authorities and will be available at http://www.sedar.com.

Canaccord Genuity Corp. acted as exclusive financial advisor to GLENTEL. Owen Bird Law Corporation acted as legal counsel to GLENTEL, McCarthy Tétrault LLP acted as legal counsel to the Special Committee of GLENTEL, and Blake, Cassels & Graydon LLP in Canada and Sullivan & Cromwell in the US acted as legal counsel to Bell.

Bell accelerating wireless in Canada
Since 2006, Bell has invested about $7 billion to acquire new mobile 4G spectrum and build advanced wireless networks in every region of Canada. As a result, a re-energized Bell is regaining its leadership position in Canadian wireless with rapid customer adoption of smartphones and ongoing fast growth in data services like mobile TV.

Bell is rolling out the best wireless network technology available, 4G LTE, and now offers Canadians access to the largest LTE service footprint in the country. Available to 84% of the population, LTE coverage is growing fast as Bell extends the broadband service to smaller towns, rural communities and Canada’s North. By the end of 2015, Bell 4G LTE service will cover more than 98% of Canadians – similar to Bell’s existing 4G HSPA+ network. This summer, Bell was able to increase data speeds up to 45% across its LTE network for all smartphone users.

Bell’s ongoing strategic transformation is built on industry-leading investment in communications growth services, including wireless, TV, Internet and media. With over $3 billion in capital investment each year in new fibre and mobile networks, and more than $575 million in Canadian R&D annually, Bell invests more in Canadian communications infrastructure and service innovation than any other communications provider.

About GLENTEL

Based in Burnaby, BC, Canada, GLENTEL (TSX: GLN) is a provider of creative and reliable wireless communications services and solutions, offering a choice of network carrier and wireless or mobile products and services to consumers and commercial customers. GLENTEL is an independent multicarrier mobile phone retailer in Canada and Australia. In the United States, GLENTEL operates two of the six National Premium Retailers for Verizon Wireless. To its business and government customers, GLENTEL offers wireless systems and hardware, rental equipment, and system implementation services. GLENTEL celebrated its 50th anniversary in 2013.
GLENTEL employs over 4,670 employees and operates about 1,400 locations, including 494 retail and business locations in Canada, 735 locations in the United States; and 147 retail locations in Australia and the Philippines.

About BCE

BCE is Canada’s largest communications company, providing a comprehensive and creative suite of broadband communication services to consumers and business customers through the Bell Canada and Bell Aliant brands. Bell Media is Canada’s premier multimedia company with leading assets in television, radio, out of home and digital media, including CTV, Canada’s #1 television network, and the country’s most-watched specialty channels. To learn more, please visit BCE.ca.

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