TORONTO – A new ownership structure has been announced for Bell Globemedia that would see BCE Inc. give up its position as major shareholder, as the Ontario Teachers’ Pension Plan and Torstar join as new shareholders.
BCE would decrease its share to 20% from 68.5%, while The Woodbridge Company, the Toronto-based holding company of the Thomson family, would increase its ownership from 31.5% to 40%. The two new shareholders—Teachers’ and Torstar—would each acquire a 20% stake in the Canadian media giant.
“The continuing support of BCE and Woodbridge and the addition of Teachers’ and Torstar represents a strong vote of confidence in our performance over the last five years and in our plans for the future,” said Ivan Fecan, President and Chief Executive Officer of BGM and Chief Executive Officer of CTV in a statement.
The changes are subject to regulatory approval, including the CRTC and the Competition Bureau. The transaction will have no effect on Bell Globemedia’s senior leadership, operations, or mix of business, the company said.
BCE and Bell Globemedia have also signed a new commercial agreement that calls for the two companies to work together on new initiatives that will use BEC distribution platforms to maximize Bell Globemedia content. Among a number of new joint initiatives expected to be announced in the new year are customized news and sports “made for mobile” video clips and a next generation TSN Extra, offering a first-to-market interactive TV experience to Bell ExpressVu customers.
Even though BCE’s stake in Bell Globemedia is drastically reduced, BCE President and CEO Michael Sabia said the company is still committed to BGM. "Bell Globemedia has tremendous potential as Canada’s flagship media enterprise and, together with our partners, we will be actively engaged in its future growth. BCE sees its participation in Bell Globemedia as a significant opportunity for our company, particularly as we leverage our continued access to Bell Globemedia’s content for our growth platforms: wireless, Internet and television. Our ongoing involvement with Bell Globemedia will drive our efforts to develop innovative, next generation services for our customers."
The new ownership will strengthen the properties in the BGM fold, which includes CTV, The Globe and Mail, and 15 specialty television services, said Ken Thomson, Chairman of Woodbridge. "We strongly believe that Bell Globemedia has a tremendous future in the rapidly changing media sector. Today’s announcement positions the company to seize those opportunities. This new shareholder group brings together four great Canadian businesses to create an even stronger and more dynamic Bell Globemedia."
At the closing, which is expected to take place in the third quarter of 2006 assuming regulatory approvals have been obtained, Teachers’ and Torstar will each purchase its interest in Bell Globemedia from BCE for $283 million and Woodbridge will purchase its additional 8.5 percent interest from BCE for $120 million. These transactions value Bell Globemedia at approximately 10 times EBITDA.
At the time of closing, Torstar, Teachers’ and Woodbridge will each invest in Bell Globemedia on the same financial valuation which anticipates an enterprise value in the range of $2.6 billion to $2.7 billion and an equity value of $1.413 billion.
In conjunction with the agreement to make these ownership changes, Bell Globemedia will restructure its capital on a basis more appropriate to ongoing operations through additional borrowing and a return of capital to BCE and Woodbridge. The recapitalization is expected to be completed in January 2006.
The recapitalization of Bell Globemedia and the sale of its shares to Torstar, Teachers’ and Woodbridge will see BCE receive cash proceeds of approximately $1.3 billion, including $607 million as a return of capital. Together with its remaining 20 percent interest in Bell Globemedia, these transactions value BCE’s pre-recapitalization interest in Bell Globemedia at approximately $1.575 billion.
Torstar will equity account for the investment and will fund it with debt. Torstar expects the acquisition to be modestly accretive, apart from any potential amortization of intangible assets.
