Tags: BCE | Astral | Media | buy

BCE to Buy Astral Media for $3 Billion to Expand in Quebec

Friday, 16 March 2012 12:05 PM

BCE Inc., Canada’s largest telephone company, agreed to acquire Quebec broadcaster Astral Media Inc. for C$3 billion ($3 billion) in cash and stock to expand in Quebec’s French-speaking media market.

The acquisition intensifies competition with Montreal-based Quebecor, which operates the Videotron cable service and TVA television network and last year began selling smartphones to challenge Bell Mobility’s leading position in the province.

Holders of Astral Class A non-voting stock will get C$50 a share, Montreal-based BCE said today in a statement. That’s 38 percent more than yesterday’s closing price. BCE will also assume $380 million of Astral debt.

The deal, subject to regulatory approval, is Chief Executive Officer George Cope’s third major acquisition since 2010 as he looks to add content that he can sell on smartphones and tablets in what he calls his “four-screen” strategy. Buying Astral gives BCE 22 channels, including French channels MusiquePlus and Super Ecran, with which to challenge Quebecor Inc. in Quebec, Canada’s second-most populous province.

“Does this enhance our competitive position in Quebec? Without a doubt it does,” Cope told analysts on a conference call today.

Astral, which has about 2,800 employees, generated net income of C$55.8 million last quarter on sales of C$271.1 million. The stock was up 12 percent to C$48.37 in Toronto at 10:36 in Toronto. BCE was little changed.

Since 2010, BCE has signed three major acquisitions worth $7.6 billion, including debt, according to data compiled by Bloomberg. Astral Media will be the largest cash deal and comes three months after BCE and Rogers Communications Inc. agreed to buy a controlling stake in Maple Leaf Sports & Entertainment Ltd. in a $1.3 billion deal to own the most valuable team in the National Hockey League. BCE agreed to buy Canadian broadcaster CTV in 2010 for C$1.3 billion in cash and C$1.7 billion in debt, giving it 30 specialty channels including sports channel TSN.

In his first two years since becoming CEO in mid-2008, Cope focused on cutting jobs and other operating costs and spent less than $500 million on acquisitions, according to the data. Since then he has been ramping up deals to add content as consumer spending on wireless data spending soars. Data revenue at BCE’s Bell Mobility unit jumped 32 percent last quarter from a year earlier, outpacing overall sales growth of 10 percent.

Ian Greenberg, president and CEO of Astral, will join the board as part of the agreement. Abgreen Holdings Ltd., the holding company of the Greenberg family, controlled 63.7 percent of Astral Media’s voting share according to an October filing.

“We thought about this for a few months and had several approaches,” Greenberg told analysts. “It was a matter of a getting a deal that made sense or shareholders and 2,800 employees.”

The deal values Astral at 9.9 times trailing 12-month earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That compares with a median of 14.6 times for media takeovers globally worth at least $500 million, the data show.

Stikeman Elliott LLP is acting as legal advisor to Astral and Goodmans LLP is acting as independent legal advisor to the Special Committee. RBC Capital Markets is acting as exclusive financial advisor to Astral and National Bank Financial is acting as independent financial advisor to the Special Committee.

© Copyright 2018 Bloomberg News. All rights reserved.

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Friday, 16 March 2012 12:05 PM
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