MONTREAL – BCE Inc (TSX:BCE) has signed a deal to buy wireless phone retailer Glentel Inc. (TSX:GLN) in a deal valued at $670 million in stock, cash and debt, giving a major boost to the company’s retail operations.
“Glentel’s national reach, deep product knowledge and great customer service and sales execution are key to our strategy to accelerate wireless,” BCE president and chief executive George Cope said in a statement Friday.
Glentel has nearly 500 retail locations across Canada, selling wireless products and services from a variety of carriers including Bell Mobility, Rogers Wireless (TSX:RCI.B), Chatr, Fido, SaskTel and Virgin Mobile.
The company also has 735 locations in the U.S. and 147 in Australia and the Philippines.
Wireless has been key to BCE’s growth in recent years.
The company said it has spent roughly $7 billion since 2006 to acquire new wireless spectrum and build the high-speed wireless networks to utilize those airwaves.
Glentel shareholders can choose to receive either $26.50 in cash or 0.4974 of a BCE share for each Glentel share they hold. The company has capped the total cash available at half of the proposed offer, while the number of shares is also limited to half the deal.
The company will also take on net debt and a minority interest of approximately $78 million as part of the deal.
Glentel shares, which closed at $12.75 on the Toronto Stock Exchange on Thursday before the deal was announced, more than doubled Friday as they gained $13 to close at $25.75. BCE shares were up a penny at $53.34.
“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 provide additional value to our shareholders and employees,” Glentel president and chief executive Tom Skidmore said.
Shareholders are expected to vote on the transaction early next year with the agreement expected to close by the end of the first quarter.
The Skidmore family, which has an approximately 37 per cent stake in Glentel, has signed agreements with Bell supporting the sale.
Under the proposed deal, Glentel has also agreed not to declare or pay dividends on its shares through to the closing date.
The deal includes a non-solicitation agreement and gives Bell the right to match any superior offer. If Bell does not exercise that right, it will receive a break fee of $33.6 million.
A reverse break fee of $33.6 million is payable to Glentel if the deal does not close for competition approval reasons.