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Shareholder-Info

MTS Acquisition

On May 2, 2016, BCE announced that it will acquire all of the issued and outstanding common shares of Manitoba Telecom Services Inc. (MTS) in a transaction valued at approximately $3.9 billion.

The transaction will be completed through a plan of arrangement under which BCE will acquire all of the issued and outstanding common shares of MTS for $40 per share, which will be paid with a combination of BCE shares and cash.

As specified under the plan of arrangement, MTS shareholders will be able to elect to receive, for each MTS common share held, either:

  • $40.00 in cash, subject to proration (the Cash Consideration); or
  • 0.6756 of a BCE common share, subject to proration (the Share Consideration)  

Any election by a MTS shareholder is subject to proration and rounding such that the aggregate consideration will be paid 45% in cash and 55% in BCE common shares. The share consideration is based on BCE's 20-day volume weighted average price on April 29, 2016 (the last trading day prior to the announcement of the transaction) of $59.21.

The offer price represents a 23.2% premium to MTS’s volume weighted average closing share price on the TSX for the 20-day period ending April 29, 2016, the last trading day prior to the announcement of the transaction, and a 40% premium to MTS's closing price of $28.59 on November 20, 2015, the last trading day prior to the announcement by MTS of the sale of its Allstream business communications division. The Board of Directors of MTS has unanimously approved the proposed acquisition of MTS by BCE.

Expected to close in early 2017, the Bell MTS transaction has been approved by MTS shareholders, the Manitoba courts and the CRTC, and is subject to approval by the Competition Bureau and Innovation, Science and Economic Development (ISED).

MTS’s management information circular was mailed to MTS shareholders providing important information on the plan of arrangement and related matters. The circular is available at www.mts.ca/investors and www.sedar.com.

Frequently Asked Questions by MTS Shareholders


ABOUT THE PLAN OF ARRANGEMENT 

What will I receive if the plan of arrangement is completed?
MTS shareholders will have the opportunity to choose to receive either $40.00 per MTS share (the Cash Consideration) or 0.6756 of a BCE common share per MTS share (the Share Consideration), subject to proration, such that the aggregate consideration that MTS shareholders will receive will be 45% in cash and 55% in BCE common shares.

Does the cash consideration offered represent a premium?
The cash consideration represents a 23.2% premium to the volume weighted average closing price of MTS common shares on the TSX for the 20-day trading period ending April 29, 2016, the last trading day prior to the announcement of the plan of arrangement, and a 40% premium to the closing price of MTS common shares of $28.59 on November 20, 2015, the last trading day prior to the announcement by MTS of the sale of its Allstream business.

How do I make an election for cash or shares?
If you are a Registered Shareholder, you make an election to receive, in respect of your MTS common shares, either the Cash Consideration or the Share Consideration, by depositing with the Depositary, on or prior to the Election Deadline, a duly completed Letter of Transmittal and Election Form indicating your election, together with, as applicable, any MTS common share certificate(s). If you are a Non-Registered Shareholder, you should carefully follow the instructions from the Intermediary that holds MTS common shares on your behalf.

Provided MTS shareholders approve the Arrangement Resolution and the Final Order is granted, then MTS will send you a Letter of Transmittal and Election Form following payment of the second quarter 2016 dividend explaining how you can deposit and obtain payment for your MTS common shares once the plan of arrangement is completed. The Letter of Transmittal and Election Form will also be available on MTS’s website at www.mts.ca/investors as well as under MTS’ profile on SEDAR at www.sedar.com or by contacting the Depositary.

The Letter of Transmittal and Election Form must be received by the Depositary on or prior to the Election Deadline. Any Letter of Transmittal and Election Form, once deposited with the Depositary, will be irrevocable and may not be withdrawn by a MTS shareholder.

When is the Election Deadline?
The Election Deadline will be 5:00 p.m. (Toronto time) on the date that is three Business Days prior to the Effective Date, unless otherwise agreed in writing by MTS and BCE. MTS will provide at least four Business Days’ notice of the Election Deadline by means of a press release disseminated over newswire services in Canada.

What happens if I do not make an election?
If you are a MTS shareholder (other than a Dissenting Holder) and do not deposit with the Depositary a properly completed and duly executed Letter of Transmittal and Election Form together with the certificates representing your MTS common shares (if you are a Registered Shareholder), or otherwise fail to properly make an election through your Intermediary (if you are a Non-Registered Shareholder), on or prior to the Election Deadline, you will be deemed to have elected to receive the Cash Consideration, subject to proration.

Am I guaranteed to receive what I elected?
Any election of Cash Consideration or Share Consideration by a MTS shareholder is subject to proration and rounding. MTS shareholders will receive, in the aggregate, cash in respect of 45% of the issued and outstanding MTS common shares (or approximately $1.335 billion based on the issued and outstanding MTS common shares as of May 25, 2016) and in BCE common shares in respect of 55% of the issued and outstanding MTS common shares.

Can BCE change the allocation of Cash Consideration and Share Consideration?
No. MTS shareholders who have elected to receive either Cash Consideration or Share Consideration may receive a combination of Cash Consideration and Share Consideration due to proration (where MTS shareholders collectively elect or are deemed to have elected, as applicable, to receive more than the Maximum Cash Consideration or the Maximum Share Consideration) and rounding, but BCE cannot change the aggregate allocation of Cash Consideration (45%) and Share Consideration (55%).

Will I receive fractional shares?
No. In no event will a MTS shareholder receive a fractional BCE common share. MTS shareholders will receive a cash payment in respect of any fractional BCE common share, to which MTS shareholders are entitled. 

When will I receive the consideration for my MTS common shares?
You will receive the Consideration for your MTS common shares as soon as practicable after the plan of arrangement is completed, provided you have sent all of the necessary documentation to the Depositary.

When will the plan of arrangement be completed?
It is presently anticipated that the plan of arrangement will be completed in early 2017. However, completion of the plan of arrangement is dependent on many factors outside of MTS and/or BCE’s control and it is not possible at this time to determine precisely when or if the plan of arrangement will become effective.

Must I be a MTS shareholder on the date that the plan of arrangement is completed in order to receive the consideration?
You need to be a MTS shareholder at 12:01 a.m. (Manitoba time) on the date that the plan of arrangement is completed.

What will I have to do as a MTS shareholder to receive the Consideration for my MTS common shares?
If you are a Registered Shareholder, you will receive a Letter of Transmittal and Election Form that you must complete and send with the certificate(s) (if applicable) representing your MTS common shares to the Depositary. The Depositary will mail you a cheque and/or a direct registration system statement by first class mail as soon as practicable after the Effective Date or upon receipt of your completed Letter of Transmittal and Election Form and of your MTS common share certificate(s).

If you are a Non-Registered Shareholder, you will receive your payment through your account with your broker, investment dealer, bank, trust company or other Intermediary that holds MTS common shares on your behalf. You should contact your Intermediary if you have questions about this process.

Should I send in my share certificates now?
No. Provided MTS shareholders approve the Arrangement Resolution and the Final Order is granted, then MTS will send you a Letter of Transmittal and Election Form following payment of the second quarter 2016 dividend explaining how you can deposit and obtain payment for your MTS common shares once the plan of arrangement is completed.  The Letter of Transmittal and Election Form will also be available on MTS’s website at www.mts.ca/investors, on MTS’s profile on SEDAR at www.sedar.com or by contacting the Depositary.


ABOUT APPROVAL OF THE PLAN OF ARRANGEMENT 

What approvals are required for the plan of arrangement to become effective?
Completion of the plan of arrangement is subject to, among other things, the receipt of (i) the Required Shareholder Approval, (ii) the Final Order, (iii) the CRTC Approval, (iv) the Competition Act Clearance, (v) the ISED Approval and (vi) the Stock Exchange Approvals.


TAX CONSEQUENCES TO MTS SHAREHOLDERS 

MTS shareholders are urged to consult their own legal and tax advisors with respect to the tax consequences to them having regard to their particular circumstances, including the application and effect of the income and other tax laws of any country, province or other jurisdiction that may be applicable to the MTS shareholder.

What are the anticipated Canadian Federal Income Tax consequences of the plan of arrangement?
The plan of arrangement contemplates that a MTS shareholder may elect to exchange all of his, her or its MTS common shares for Cash Consideration or Share Consideration. Under the terms of the plan of arrangement there is a fixed amount of Cash Consideration that will be paid to, and a fixed number of BCE common shares that will be issued to, MTS shareholders (depending on the number of MTS common shares outstanding at the Effective Time) and, accordingly, a MTS shareholder may receive a combination of Cash Consideration and Share Consideration for each of his, her or its MTS common shares notwithstanding the election such MTS shareholder makes in his, her or its Letter of Transmittal and Election Form.

The tax consequences to a MTS shareholder in respect of the exchange of a MTS shareholder’s MTS common shares will depend on whether the MTS common shares are exchanged for Cash Consideration, Share Consideration or a combination of Cash Consideration and Share Consideration:

  1. a MTS shareholder who exchanges MTS common shares for Cash Consideration pursuant to the plan of arrangement will realize a capital gain (or capital loss) equal to the amount by which the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the MTS shareholder’s MTS common shares immediately before the exchange;
  2. a MTS shareholder who exchanges MTS common shares for a combination of Share Consideration and Cash Consideration (as a result of proration or as a result of a deemed election) pursuant to the plan of arrangement and who does not make a valid Tax Election, will realize a capital gain (or capital loss) equal to the amount by which the proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the MTS shareholder’s MTS common shares immediately before the exchange; and
  3. a MTS shareholder who exchanges MTS common shares solely for Share Consideration (except for cash in lieu of a fractional share, if applicable), and who does not make a valid Tax Election will be entitled to the automatic tax deferral provided for in subsection 85.1(1) of the Tax Act, unless such MTS shareholder chooses to recognize a capital gain or capital loss on the exchange.

An Eligible Holder who receives Share Consideration only or a combination of Cash Consideration and Share Consideration (as a result of proration or as a result of a deemed election) under the plan of Arrangement may obtain a full or partial tax deferral in respect of the disposition of MTS common shares by filing with the CRA (and, where applicable, with a provincial tax authority) a joint election made by the Eligible Holder and Purchaser Subco under subsection 85(1) of the Tax Act (or, in the case of a partnership, under subsection 85(2) of the Tax Act, provided all members of the partnership jointly elect) and the corresponding provisions of any applicable provincial tax legislation.

Note: A MTS shareholder who elects to receive Share Consideration, but, because of proration, receives a combination of Share Consideration and Cash Consideration, will be required to make a joint election under subsections 85(1) or 85(2) of the Tax Act and the corresponding provisions of any applicable provincial tax legislation, in order to obtain a full or partial tax deferral.

For a more detailed discussion of the Canadian federal income tax consequences of the Arrangement, please see the discussion under the heading “Certain Canadian Federal Income Tax Considerations” in MTS’s management information circular.

Can I obtain a tax-deferred rollover for any MTS common shares for Canadian federal income tax purposes?
If you dispose of MTS common shares under the plan of arrangement and receive only Share Consideration then you may be entitled to the automatic tax deferral provided for in subsection 85.1(1) of the Tax Act provided that you do not choose to recognize any gain or loss from the disposition of your MTS common shares in your annual tax return and do not file a Tax Election.

If you dispose of MTS common shares under the plan of arrangement and receive either only Share Consideration or a combination of Share Consideration and Cash Consideration (as a result of proration or as a result of a deemed election) then, provided you are an Eligible Holder, BCE will make a joint election with you under subsection 85(1) or 85(2) of the Tax Act, as applicable, in order for you to obtain a full or partial tax deferral. If you elect to receive only Share Consideration but, because of proration, receive a combination of Share Consideration and Cash Consideration, the automatic tax deferral provided for in subsection 85.1(1) of the Tax Act will not be available to you and you will be required to make a joint election under subsections 85(1) or 85(2) of the Tax Act if you desire to obtain a full or partial tax deferral.

For a more detailed discussion of the Canadian federal income tax consequences of the Arrangement, please see the discussion under the heading “Certain Canadian Federal Income Tax Considerations” in MTS’s management information circular.

Where can I find the tax instruction letter and Tax Election forms?
Information and instructions related to the Tax Election will be available on this page (in the Download Centre) prior to the Effective Date, which is expected in early 2017.


WHO TO CALL WITH QUESTIONS 

Who can I contact if I have questions?
If you have any questions about the information contained in MTS’s management information circular or require assistance in completing your form of proxy or Letter of Transmittal and Election Form, please contact MTS’s proxy solicitation and information agent, D.F. King, toll free at 1-800-398-2816 (1-201-806-7301 by collect call) or by email at inquiries@dfking.com or the Depositary under the Arrangement, Computershare Trust Company of Canada, toll free at 1-877-982-8757.

If you have questions about deciding how to vote, you should contact your own legal, tax, financial or other professional advisor.

 

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