BCE on Monday agreed to acquire US-based internet provider Ziply Fiber in a deal with a total value of about 7 billion Canadian dollars ($5.04 billion), including debt. The Canadian telecommunications company's subsidiary, Bell Canada, will buy Ziply for roughly CA$5 billion in cash and assume around CA$2 billion of its outstanding debt at the close of the deal.
The transaction, which requires approval from regulators, is expected to be completed in the second half of next year. "This acquisition marks a bold milestone in Bell's history as we lean into our fiber expertise and expand our reach beyond our Canadian borders," BCE Chief Executive Mirko Bibic said in a statement.
"By bringing together Bell and Ziply Fiber's exceptional talent, we'll accelerate our growth while continuing to deliver significant value for our customers and shareholders." Ziply, which has more than 1.3 million fiber locations across four US states, will operate as a separate business unit and continue to be headquartered in Washington, BCE said.
Ziply plans to reach over 3 million locations in the next four years. The acquisition is expected to enable Bell Canada to expand its fiber presence to over 12 million locations in North America by the end of 2028. "This acquisition enhances our growth strategy with the scale and experience of one of North America's leading fiber operators," Ziply CEO Harold Zeitz said. BCE plans to fund CA$4.2 billion of the acquisition price from net proceeds of the proposed sale of its ownership stake in sports and commercial real estate company Maple Leaf Sports & Entertainment.
Bell Canada has entered into a $3.7 billion fully committed delayed-draw term loan facility to finance the latest acquisition if the Maple Leaf deal completion occurs after the closing date of the Ziply deal. In September, BCE announced to sell its ownership stake in Maple Leaf to Rogers Communications for CA$4.7 billion. The remaining portion of the Ziply transaction will be financed through BCE's discounted treasury dividend reinvestment program, the company said.
Under the program, the firm will issue new shares at a discount to the average market price preceding its applicable dividend payment date, allowing stockholders to reinvest all or any portion of paid dividends on their shares, without any commission charges or brokerage fees. BCE said it intends to maintain its annual dividend at $3.99 per share for the full year ending Dec.
31, 2025. The company aims to pause dividend growth until its payout and net debt leverage ratios are tracking towards its target policy ranges. Price: 29.62, Change: -2.48, Percent Change: -7.73 $BCE.