Telus is Canada’s second largest telecoms company and plans to purchase all the outstanding publicly traded shares and warrants of Microcell. The total equity value of the transaction is about CAD 1.1bn ($790m). The offer price breaks down to CAD 29 ($20.84) for each Microcell share, a 36% premium over Microcell’s closing stock price last Thursday.
According to Telus, its bid is consistent with its strategy to focus on the growth markets of wireless, internet protocol and data, and increases the speed at which the company can enhance its position, particularly in Quebec and Ontario.
Telus is known to be keen to challenge rival Bell Canada’s hold on the eastern half of the country. The acquisition of Microcell, the operator of the popular Fido wireless service, would make Telus the largest provider of mobile phone services in Canada.
A merger would also reduce the market from four major wireless players to three. Microcell is the smallest competitor in Canada’s mobile phone industry, ranking behind Bell Mobility (part of Bell Enterprise Group), Rogers Wireless (part of Rogers Communications Inc), and Telus Mobility.
The combination of the wireless businesses of Microcell with Telus would create an entity with an estimated 4.76 million customers, compared Bell Mobility’s 4.5 million and Rogers’ 3.84 million.
Microcell only just emerged from court-ordered creditor protection on May 1, after it had to restructure a year ago after being forced into bankruptcy protection. Its creditors converted about CAD 1.7bn ($1.22bn) of debt into equity to keep the company afloat.
Microcell has said that until it receives the offer and completes its review, it will not comment on the offer or its contents and will not speculate as to any future course of action it might take.
