# BCE to buy MBT



## pwm (Jan 19, 2012)

BCE just announced it plans to buy Manitoba Telecom for $40. Good news for me, since I've held MBT from day one when it was IPO'd. I held on for the dividend through good times and bad. I own 2200 shares, so will get a nice cap gain.


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## hollyhunter (Mar 10, 2016)

BCE INC. (BCE.TO) has been showing support at 58.10 and resistance at 60.39. Bullish technical indication:Bulish cross in Stochastic oscillator and RSI is trading near to 48.98 level with positive bias.


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## james4beach (Nov 15, 2012)

So the 4th largest telecom company in Canada is disappeared in a giant corporate merger. Great. That means less competition (phone & internet) and even more power concentrated at the top three.

I wonder what impact this will have on Winnipeg/Manitoba. MTS is a major employer in the region and I hope this doesn't change that.


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## humble_pie (Jun 7, 2009)

pwm said:


> BCE just announced it plans to buy Manitoba Telecom for $40. Good news for me, since I've held MBT from day one when it was IPO'd. I held on for the dividend through good times and bad. I own 2200 shares, so will get a nice cap gain.



yay! mille félicitations!


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## yyz (Aug 11, 2013)

james4beach said:


> So the 4th largest telecom company in Canada is disappeared in a giant corporate merger. Great. That means less competition (phone & internet) and even more power concentrated at the top three.
> 
> I wonder what impact this will have on Winnipeg/Manitoba. MTS is a major employer in the region and I hope this doesn't change that.


We have BCE,Telus ,Rogers and I'm sure Shaw has plans now that they bought Wind.How many players do we really need?Competition from MBT wasn't national anyway.The US has what 10X our population and how many major carriers do they have? Not alot different from when they swallowed Bell Alliant.


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## Parkuser (Mar 12, 2014)

I am trying to figure out why not to sell 644 shares of BCE at 59 for $38000 to buy 1000 shares of MBT for $38000. Let say the deal goes through in 6 months, I gain $2000. Even assuming that I would lose 2 dividends of BCE 2*644*0.683=$$880 I would get 2 dividends of MBT 2*1000*$0.325=$650. The gain is thus 2000-880+650=$1770. Seems to be free money for a buy-and-hold guy. 

If the deal does not go through, MBT would go back to $33 – loss of 1000*(38-33)=$5000.
Reward to loss ratio would be 1770/5000=35%. Obviously people do not go for it. Is the risk of the deal not going through due to government intervention relatively high?


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## yyz (Aug 11, 2013)

Obviously that is your risk that the deal falls apart. Funny that BCE gets a breakup fee if it does.Again like the Bell Alliant deal ,if fully subscribed you would get cash + BCE shares .The market is leaving some leeway with the MBT shares staying around $38.And BCE has already stated they will shed both wireless subs and store fronts to Telus to appease the fed regulators.Obviously the market is not convinced this is a done deal.


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## fretwire (Apr 13, 2016)

> MTS shareholders will be able to elect to receive $40 in cash or 0.6756 of a BCE common share for each MTS common share, subject to proration such that the aggregate consideration will be paid 45 per cent in cash and 55 per cent in BCE common shares. The share consideration is based on BCE's 20-day volume-weighted average price of $59.21.


Cash and share deal so it could be that the market accepts the deal will go through but is valuing the BCE share component at closer to the $56 range (based on .6756 BCE for each MBT and MBT at about $38)


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## jerryhung (Mar 28, 2011)

Wish I own more shares (after buying at $33, only to see it go down to $24 then back to $30, then $34 and then $32)
but it's profits nonetheless

Regulatory process will take 9-12 months

I wonder if another bidder may even surface (who's left? Telus?)... since Rogers is #2 in Manitoba already


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## yyz (Aug 11, 2013)

Parkuser said:


> I am trying to figure out why not to sell 644 shares of BCE at 59 for $38000 to buy 1000 shares of MBT for $38000. Let say the deal goes through in 6 months, I gain $2000. Even assuming that I would lose 2 dividends of BCE 2*644*0.683=$$880 I would get 2 dividends of MBT 2*1000*$0.325=$650. The gain is thus 2000-880+650=$1770. Seems to be free money for a buy-and-hold guy.
> 
> If the deal does not go through, MBT would go back to $33 – loss of 1000*(38-33)=$5000.
> Reward to loss ratio would be 1770/5000=35%. Obviously people do not go for it. Is the risk of the deal not going through due to government intervention relatively high?


This will change your calculations above

"Mts will not declare any further dividends on its common shares after its upcoming second-quarter 2016 dividend"


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## Parkuser (Mar 12, 2014)

yyz said:


> This will change your calculations above
> 
> "Mts will not declare any further dividends on its common shares after its upcoming second-quarter 2016 dividend"


You are right. And BCE is down too. Maybe to make an andrenaline generating trade I should wait for the TCK-B dropping further.


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## cainvest (May 1, 2013)

jerryhung said:


> I wonder if another bidder may even surface (who's left? Telus?)... since Rogers is #2 in Manitoba already


Telus is already involved with the BCE deal.


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## james4beach (Nov 15, 2012)

Michael Geist (U Ottawa / Canada Research Chair in tech & law) is a guest on a CBC Winnipeg radio program right now.

He says Manitobans will not benefit from this. Wireless costs in MB are the lowest in Canada; there are 4 carriers competing in MB today. He says this will definitely reduce competition significantly (4 carriers --> 3) and consumer prices will go up.

I can speak to that from my time in MB. There were lots of options, and in fact MTS had some of the best rural coverage... if you were going anywhere outside the cities that you wanted MTS service. The fact that MTS existed as a 4th carrier really kept the other carriers in check and forced them to provide attractive pricing.

Geist also says it is possible the government may block this because of the significant reduction in competition and what is expected to be a significant increase in prices.


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## doctrine (Sep 30, 2011)

1. This is fantastic news for Manitoba. Finally, some actual investment in infrastructure. How widespread is gigabit internet in Manitoba? Bell agreed to roll out a $1B upgrade program and will increase MTS internet speeds by 20 times within 1 year. Internet is faster in Atlantic Canada than Manitoba, where Bell has already rolled out fibre to a majority of homes. 

2. Why would government vote no? Manitoba doesn't need more competitors than other provinces, so I fail to see any legal basis on that comparison. If they block in Manitoba, they should be breaking up companies in other provinces - an MTS for every province. That would be a disaster, of course, as investment would dry up faster than lending to Puerto Rico. Geist is out to lunch on that.

3. The 5% arbitrage difference is probably fair given the likely 7-10 month timeframe for approval. It's not free money; if it takes 12 months, you could get 4.6% just by holding BCE shares with zero capital appreciation.

You know what is interesting? It looks like the same day that MTS announced the deal to sell Allstream, Nov 23rd, was the same day that BCE raised $750M of common share equity. No doubt the $750M is a big part of the purchase price now being paid. Hindsight 20/20.

http://business.financialpost.com/n...-least-750-million-from-common-share-offering
http://www.bnn.ca/News/2015/11/23/M...ll-Allstream-to-US-group-for-465-million.aspx


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## Cold_one (Mar 23, 2011)

james4beach said:


> Michael Geist (U Ottawa / Canada Research Chair in tech & law) is a guest on a CBC Winnipeg radio program right now.
> 
> He says Manitobans will not benefit from this. Wireless costs in MB are the lowest in Canada; there are 4 carriers competing in MB today. He says this will definitely reduce competition significantly (4 carriers --> 3) and consumer prices will go up.
> 
> ...


Geist may be correct in generalities, however from a personal perspective MTS controls the province. I believe greater than 50% of the cell service and I suspect 80% or more of land line. I live in rural S. Manitoba and MTS is the only game for land line - The Rogers is a cell based service and Rogers cell service is not reliable - Plus Rogers cell uses MTS towers here. BCE and Telus have 10% or less respectively and really only work in Winnipeg (possibly Brandon).

So, yes, technically less competition and MTS may have been keeping prices low(er) to keep market share, but I agree with Doctrine that MTS does not have the capability to invest at anywhere near the level BCE is suggesting. 

MTS has been nudging above $30 for last few months - possibly due to takeover rumors and after the sale of Allstream. So I as a pretty large holder of MTS shares am hoping for the deal to go through. If I was a risk taker I'd add some more shares of MTS @37 hoping deal closes @ $40, an approx 8% gain. (or am I doing the math wrong?)


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## My Own Advisor (Sep 24, 2012)

BCE, RCI.B, T shareholder here. Show me the dividends!!!


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## yyz (Aug 11, 2013)

http://www.therecord.com/news-story/6529798-meddling-in-wireless-market-failed-report/


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## andrewf (Mar 1, 2010)

For those of us who signed up for the Koodo $48 MB plan (5gb data + unlimited calls/texts), but do not reside in MB, should we be expecting the party to be over now that Manitoba is being reduced to the level of competition seen in the rest of the country (cozy oligopoly)?


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## My Own Advisor (Sep 24, 2012)

That Koodo plan is great. I wish I had that!


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## m3s (Apr 3, 2010)

andrewf said:


> For those of us who signed up for the Koodo $48 MB plan (5gb data + unlimited calls/texts), but do not reside in MB, should we be expecting the party to be over now that Manitoba is being reduced to the level of competition seen in the rest of the country (cozy oligopoly)?


That was also my first concern *owns BCE


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## jerryhung (Mar 28, 2011)

Cold_one said:


> Geist may be correct in generalities, however from a personal perspective MTS controls the province. I believe greater than 50% of the cell service and I suspect 80% or more of land line. I live in rural S. Manitoba and MTS is the only game for land line - The Rogers is a cell based service and Rogers cell service is not reliable - Plus Rogers cell uses MTS towers here. BCE and Telus have 10% or less respectively and really only work in Winnipeg (possibly Brandon).
> 
> So, yes, technically less competition and MTS may have been keeping prices low(er) to keep market share, but I agree with Doctrine that MTS does not have the capability to invest at anywhere near the level BCE is suggesting.
> 
> MTS has been nudging above $30 for last few months - possibly due to takeover rumors and after the sale of Allstream. So I as a pretty large holder of MTS shares am hoping for the deal to go through. If I was a risk taker I'd add some more shares of MTS @37 hoping deal closes @ $40, an approx 8% gain. (or am I doing the math wrong?)


I had the same thought, M&A arbitrage + using my HELOC (Smith Manuev)

and did buy $37 Friday (then it dipped to $36.77 boo), but today $37.19

will hold till closing


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## Cold_one (Mar 23, 2011)

Maybe a boost or not, but as reported yesterday in the Financial Post, the (new) Manitoba Provincial government has endorsed the BCE purchase of MTS.

http://business.financialpost.com/f...less-upgrades-on-busy-highway?__lsa=7c8f-78c7

So going forward as an MTS shareholder I'm hoping the deal goes through. And if I had near 100% confidence in it I'd buy a few more MTS shares. However, if I want to be pragmatic, I should sell some (all) of my MTS shares now and take my approx $10 capital gain, re-invest the proceeds into BCE and at least get the dividend - MTS dividend is, I believe, suspended after the June div.


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## jerryhung (Mar 28, 2011)

Cold_one said:


> Maybe a boost or not, but as reported yesterday in the Financial Post, the (new) Manitoba Provincial government has endorsed the BCE purchase of MTS.
> 
> http://business.financialpost.com/f...less-upgrades-on-busy-highway?__lsa=7c8f-78c7
> 
> So going forward as an MTS shareholder I'm hoping the deal goes through. And if I had near 100% confidence in it I'd buy a few more MTS shares. However, if I want to be pragmatic, I should sell some (all) of my MTS shares now and take my approx $10 capital gain, re-invest the proceeds into BCE and at least get the dividend - MTS dividend is, I believe, suspended after the June div.


No wonder MBT almost had a 2% jump to $37.95 on Friday
I sold some at $37.4 before it went to $37.95, then closed at $37.24

It's an 8% ($37 to $40) arbitrage, I'll gamble some. 
It's hard to get those M&A arbitrage in Canadian markets. USA has a lot


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## pwm (Jan 19, 2012)

I got my "Management info circular" and proxy vote package yesterday as an MTS share holder. I voted in favor of course. One can opt for $40 cash or .6756 of a BCE share. I'll be choosing the BCE share option when the Election Form is available. There's an interesting section dealing with "proration". They predicted that there would be a cash to share split of 40%/60%. As far as I can tell if more people choose cash than there is money available, then they will have to take cash & some shares. The opposite is true if there aren't enough BCE shares available if that option is more than predicted. There's a complicated formula on page 36 which describes how this process would work. 

Anyone else looking at the circular? Do you get the same impression regarding the "proration" details?


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## jerryhung (Mar 28, 2011)

pwm said:


> I got my "Management info circular" and proxy vote package yesterday as an MTS share holder. I voted in favor of course. One can opt for $40 cash or .6756 of a BCE share. I'll be choosing the BCE share option when the Election Form is available. There's an interesting section dealing with "proration". They predicted that there would be a cash to share split of 40%/60%. As far as I can tell if more people choose cash than there is money available, then they will have to take cash & some shares. The opposite is true if there aren't enough BCE shares available if that option is more than predicted. There's a complicated formula on page 36 which describes how this process would work.
> 
> Anyone else looking at the circular? Do you get the same impression regarding the "proration" details?


I didn't read at all, just voted YES
probably going for $40 cash first


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## yyz (Aug 11, 2013)

It's extremely unlikely you'll get all cash, I'd say impossible.


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## mars (Mar 11, 2014)

I don't have a stake in this game but back when BCE bought out Bell Aliant, I was holder of Bell Aliant shares and they had the same stipulation about the cash / share split. I don't know how it all resolved as the BA shares got bid up on the market at a higher price than the purchase price so I sold for about a $1 above the offer price on the open market. I believe at the time people were thinking that another bid would come in and the offer would be increased. I have been watching MBT for a while and it doesn't look like that is going to happen here.


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## jerryhung (Mar 28, 2011)

mars said:


> I don't have a stake in this game but back when BCE bought out Bell Aliant, I was holder of Bell Aliant shares and they had the same stipulation about the cash / share split. I don't know how it all resolved as the BA shares got bid up on the market at a higher price than the purchase price so I sold for about a $1 above the offer price on the open market. I believe at the time people were thinking that another bid would come in and the offer would be increased. I have been watching MBT for a while and it doesn't look like that is going to happen here.


Only other possible bidder would be Telus but unlikely yes

Either way, bought another $100 today @ $37.2 for dividend (ex-div on Monday) and $40 BO (7.5% arbitrage)


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## yyz (Aug 11, 2013)

I doubt Telus would be interested as they are already getting something out of the deal.


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## Cold_one (Mar 23, 2011)

I, and I guess just everyone else voted yes for the proposed buyout by BCE. Now just have to get CRTC to approve it! 

Picked up a few hundred more of MBT a while ago as the upside seems to outweigh the down. 

_The Arrangement Resolution was approved by 99.66% of the 43,098,172 votes cast by Shareholders present in person
or represented by proxy at the special meeting of Shareholders held earlier today._


https://about.mts.ca/mts-shareholders-overwhelmingly-approve-acquisition-bce/


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## nortel'd (Mar 20, 2012)

What are the chances BCE will obtain the regulatory approvals by the Canadian Radio-television and Telecommunications Commission (CRTC), the Competition Bureau and Innovation, Science and Economic Development Canada (ISED) to purchase all the issued and outstanding common shares of MTS?

Also; if BCE obtains the regulatory approvals is there a chance MBT will approach $40 a share?


Today I received the “Plan of Arrangements with Options” from my broker and have until Jan 30, 2017 to give my “instructions” to my account representative by telephone. I am not sure which option to choose. Today BCE closed @ 58.51 and MBT closed @ 37.99. 

The default option is Option 1: Cash Election - To receive $40 CAD for every one common share of MBT tendered (subject to proration).

Option 3: Share Election – To receive 0.6756 of a common share of BCE for every MBT tendered (subject to proration).

Using today’s closing stock prices I calculate MBT @ 0.6756 BCE = 39.5294 and BCE @ MBT/0.6756 = 56.2315.


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## pwm (Jan 19, 2012)

One thing to consider: If you take the cash you will crystallize any unrealized cap gain in your MBT shares. With the BCE share option you can defer the cap gain.


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## pwm (Jan 19, 2012)

I received my Action Notice today. I chose option 3 with Joint Tax Election. I prefer to defer my MBT cap gain and you can't go wrong holding BCE. Interesting that I went through the same process with Bell Aliant not long ago. I took BCE shares in that case as well.


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## jerryhung (Mar 28, 2011)

I'm going with default option 1, take $40 cash/share

I can buy BCE myself with recent sell-off, $58 today x 0.6756 = $39.18


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## jerryhung (Mar 28, 2011)

and not sure why today MBT is -2% (BCE is only -1%)
$38.15 to $37.10


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## pwm (Jan 19, 2012)

Probably explained by this:

http://www.theglobeandmail.com/repo...-mts-deal-goes-into-overtime/article33109912/


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## jerryhung (Mar 28, 2011)

jerryhung said:


> and not sure why today MBT is -2% (BCE is only -1%)
> $38.15 to $37.10





pwm said:


> Probably explained by this:
> 
> http://www.theglobeandmail.com/repo...-mts-deal-goes-into-overtime/article33109912/


Saw that AFTER CLOSE, not really a bad news, but possibly longer timeline and lower IRR annualized I guess
so some people knew and sold?


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## pwm (Jan 19, 2012)

I received a mailing from TDDI today saying that the deadline for the Plan of Arrangement has been extended from Jan 31, 2017 to March 31, 2017. I thought at first that I would only lose one dividend from MBT, but now I've given up the October and January dividend. This thing better go through or I'll be unhappy.


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## OnlyMyOpinion (Sep 1, 2013)

*Ottawa approves BCE-MTS tie-up*
_Federal authorities have approved BCE Inc.’s $3.1-billion deal to acquire Manitoba Telecom Services Inc., one of the country’s last remaining regional telephone operators.
As part of the approval process, BCE agreed to divest wireless airwaves and subscribers to Xplornet Communications Inc., enabling the rural Internet provider to start selling mobile services in Manitoba.
This means the province will continue to have four wireless operators, although Xplornet has not previously sold cellular services._
http://www.theglobeandmail.com/report-on-business/bce-mts-deal-wins-federal-approval/article34026683/


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## jerryhung (Mar 28, 2011)

Yes, FINALLY.... 
one could've gotten better gains from TSX index investing already with the last year crazy +30% run


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## pwm (Jan 19, 2012)

Good to see. MBT is up 4.49 % today.


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## pwm (Jan 19, 2012)

Just saw that the transaction went through today in my TDDI account. I had 2200 MBT which were sold for $71,447.98 which then bought 2697 BCE as I had expected. (based on the 0.6756 BCE for each MBT.) The prices: I received *$32.476355 for MBT* and paid *$48.08074 for BCE*. I had picked option #3. 

Anyone else see their transaction go through today? Did you get all the shares you expected?


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## james4beach (Nov 15, 2012)

Congrats on the buyout and seeing the actual transactions!

As a Manitoban myself, I'm still disappointed to see the loss of MTS.

Ironically, I also own BCE shares. But only because their monopoly standing gives them an unfair advantage in the Canadian marketplace, so I'm riding the 'monopolies' wave.


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## stantistic (Sep 19, 2015)

> Anyone else see their transaction go through today? Did you get all the shares you expected?


I saw a number ending in $9.98 on my statement from which I conclude that the amount was some even number and there was a commission of $9.98. Anyway, I'm not going to sweat over that.

Otherwise, my sentiments mirror yours.


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## nortel'd (Mar 20, 2012)

pwm said:


> Anyone else see their transaction go through today? Did you get all the shares you expected?


Well it is about time. I finally own BCE instead MBT in my TFSA and on July 15th I will receive my first dividend payment on anything MBT in over a year. 
What disappointed me the most of BCE taking over MBT is how BCE was able to drag their feet to slither out of paying 4 dividend payments. BCE's X-dividend happened on March 13, 2017 ... 11 days ago!


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## stantistic (Sep 19, 2015)

*RIP MTS*

Over the years we were together, you were good to me.

Stantistic


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## yyz (Aug 11, 2013)

james4beach said:


> Ironically, I also own BCE shares. But only because their monopoly standing gives them an unfair advantage in the Canadian marketplace, so I'm riding the 'monopolies' wave.


Crap I better sell my Telus shares if BCE has a monopoly.


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## jerryhung (Mar 28, 2011)

I did nothing so default is option 1, still don't know how it worked. Why did TDDI buy 228 BCE for me (at $58.95)? I knew it was subject to proration, whatever that meant..
I had 691 MBT shares

24 Mar 2017	23 Mar 2017	
BCE INC
*ACQ	228	-	-	-$13,441.03* ???

24 Mar 2017	23 Mar 2017	
MANITOBA TELECOM SVCS IN*
DISP	-691	-	-	$27,535.81 691 x $40 = $27640, so close enough


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## yyz (Aug 11, 2013)

Here's the breakdown of the buyout for shareholders


Election
Entitlement to be received

1) Cash consideration
$20.3977 in cash and 0.3311 of a BCE common share

2)Share consideration
0.6756 of a BCE common share
3)No valid election
$20.3977 in cash and 0.3311 of a BCE common share


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## andrewf (Mar 1, 2010)

yyz said:


> Crap I better sell my Telus shares if BCE has a monopoly.


It's an oligopoly.


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## Eder (Feb 16, 2011)

Not really...Shaw just waltzed in to join the other 3.


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## jerryhung (Mar 28, 2011)

yyz said:


> Here's the breakdown of the buyout for shareholders
> 
> 
> Election
> ...


Thanks, I guess too many people wanted $40 CASH

so for 2017 capital gain reporting, how should we report then. Use 3/24 as the "sold MBT" date? say my ACB is $30, what should my "sold price" be? since I got both $20.3977 cash AND BCE shares (not yet sold)?

I thought option 2 (all stocks) does NOT trigger a capital gain until one sells the converted BCE shares?


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## yyz (Aug 11, 2013)

There is more information here

http://www.bce.ca/investors/shareholder-info/mts-acquisition

If you got the proration of $20.3977 + 0.3311 BCE share at the Friday transaction end of day BCE share price it worked out to $39.90 not bad when all cash would have been $40.00 and all cash was never going to happen.


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## jerryhung (Mar 28, 2011)

yyz said:


> There is more information here
> 
> http://www.bce.ca/investors/shareholder-info/mts-acquisition
> 
> If you got the proration of $20.3977 + 0.3311 BCE share at the Friday transaction end of day BCE share price it worked out to $39.90 not bad when all cash would have been $40.00 and all cash was never going to happen.


Thanks, I think it's easier if I just claimed capital gains for 2017 

or maybe I should've sold MBT ABOVE $40 ($40.37 was the alert I saw) I think on March 17th? surprised it went above $40.. b/c of options expiry?


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## yyz (Aug 11, 2013)

I saw that but I don't know what caused it to go above the offer.But when it opened again Monday it dropped below.


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## pwm (Jan 19, 2012)

When my MBT shares were converted to BCE there was a fraction of a BCE share that I did not get. The calculation came to 1486.32 BCE shares. I only got 1486. Today at TDDI I see a transaction which accounts for that fraction share. I got a distribution from BCE of $18.81 with an action of "CIL". 0.32 X the current price of BCE. I wondered what had happened to my fraction share and thought it was lost. Nice to see it wasn't.

Now I don't know how to enter that in Quicken. It's not a dividend. Maybe I'll use MiscInc.


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## yyz (Aug 11, 2013)

Correct there were no fractional shares.Now what to do with all that cash....


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