On Monday, BCE announced its acquisition of the US-based internet provider Ziply Fiber, with a total deal value approximating 7 billion Canadian dollars ($5.04 billion), which includes debt. The telecommunications giant's subsidiary, Bell Canada, will pay roughly CA$5 billion in cash for the acquisition, while also taking on around CA$2 billion of Ziply's outstanding debt upon completion of the agreement.
This strategic transaction is pending regulatory approval and is anticipated to close in the latter half of next year. BCE's Chief Executive, Mirko Bibic, highlighted in a statement, "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.
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 Fiber, which boasts over 1.3 million fiber locations spanning four US states, will retain its operational independence, maintaining its headquarters in Washington.
The company plans to increase its reach to over 3 million locations within the next four years. The acquisition is set to propel Bell Canada's fiber presence to over 12 million locations across North America by the end of 2028. Explaining the rationale behind the deal, Ziply's CEO Harold Zeitz mentioned, "This acquisition enhances our growth strategy with the scale and experience of one of North America's leading fiber operators." To fund this acquisition, BCE intends to utilize CA$4.2 billion from the net proceeds of its proposed sale of the ownership stake in Maple Leaf Sports & Entertainment, a sports and commercial real estate company.
Bell Canada has also arranged a fully committed delayed-draw term loan facility worth $3.7 billion to secure financing for the acquisition, contingent upon the close of the Maple Leaf deal occurring post-Ziply's deal closure. Earlier in September, BCE had publicized plans to sell its stake in Maple Leaf to Rogers Communications (RCI) for approximately CA$4.7 billion.
The remaining part of the funding for the Ziply acquisition will come from BCE's discounted treasury dividend reinvestment program, which allows stockholders to reinvest dividends without incurring commission charges. The company has pledged to maintain its annual dividend at $3.99 per share for the fiscal year ending December 31, 2025, while aiming to hold off on dividend growth until its payout and net debt leverage ratios align with strategic policy targets.
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