PrefBlog

BCE is buying Astral Media:

BCE Inc.’s (BCE-T39.64-0.42-1.05%) massive bet on media is going truly national, as the communications giant makes a $3-billion play for Astral Media Inc. (ACM.A-T48.5512.3033.93%)to shore up its broadcasting business in the one province where it was weak: Quebec.

The deal, announced Friday, gives the country’s largest communications firm a stable of French-language television and radio stations to compete with rival Quebecor Inc. It also cements BCE’s position as the leading force of consolidation in Canada’s media industry: Since 2010, it has announced deals worth nearly $7-billion to buy control of CTV Inc., Maple Leafs Sports and Entertainment Ltd., and now Montreal-based Astral.

DBRS considers it a non-event for credit:

DBRS has today confirmed the long- and short-term ratings of BCE Inc. (BCE) and its wholly-owned operating subsidiary, Bell Canada (the Company), at BBB (high)/R-1 (low) and A (low)/R-1 (low), respectively, following BCE Inc. and Bell Canada’s announcement today that they have entered into a definitive agreement to purchase the shares of Astral Media Inc. (Astral Media) for roughly $3 billion (valuing Astral Media at a total enterprise value of roughly $3.4 billion). The trend on all ratings is Stable.

With an EBITDA multiple of roughly 10 times (x) Astral Media’s F2012 EBITDA, DBRS notes that this transaction is reasonable and consistent with other recent media transactions in Canada. BCE/Bell Canada plans to fund the acquisition of the equity purchase price with cash/debt (for roughly three-quarters) and BCE Inc. common shares (for the remaining quarter, or $750 million). As part of the transaction, Ian Greenberg – one of the co-founders of Astral Media – will join the board of BCE Inc. upon closure of the acquisition.
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From a financial perspective, DBRS notes that leverage is expected to increase for Bell Canada with the addition of Astral Media, from approximately 1.8x gross debt-to-EBITDA expected at the end of 2011 to roughly 2.0x expected at the end of 2013. However, the Company’s commitment to deleverage within 24 months of the close of the transaction gives DBRS greater comfort that Bell Canada’s leverage will improve to more historical levels (and back within its own target range).

It was another quiet day for the Canadian preferred share market, with PerpetualPremiums down 5bp, FixedResets gaining 7bp and DeemedRetractibles off 5bp. The Performance Highlights table is suitably short. Volume was quite low.

This entry was posted on Friday, March 16th, 2012 at 9:20 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.