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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, and therefore shareholders may ultimately receive a combination of cash and BCE common shares by operation of the proration provisions of the plan of arrangement. 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 unanimously approved the acquisition of MTS by BCE.

BCE has obtained all regulatory approvals required to complete the transaction, which is set to close on March 17, 2017.

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 when 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). Shareholders may only elect to receive cash consideration or share consideration for all their shares; shareholders may not elect to receive a combination of cash and shares. However, any election by a shareholder is subject to proration and rounding, such that the aggregate consideration to be paid to MTS shareholders will be 45% in cash and 55% in BCE common shares, and therefore shareholders may ultimately receive a combination of cash and BCE common shares by operation of the proration provisions of the plan of arrangement.

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 may make an election to receive, in respect of your MTS common shares, either the Cash Consideration or the Share Consideration, by depositing with Computershare Trust Company of Canada, on or prior to 5:00 p.m. (Toronto time) on March 14, 2017, a duly completed Letter of Transmittal and Election Form indicating your election, together with, as applicable, any MTS common share certificate(s). The Letter of Transmittal and Election Form are  available on MTS’s website at www.mts.ca/investors and under MTS’ profile on SEDAR at www.sedar.com or by contacting Computershare Trust Company of Canada. Any questions regarding receipt of the cash or share consideration, including any request for another copy of the letter of transmittal and election form, should be directed to Computershare Trust Company of Canada by phone at 1-877-982-8757 (toll free in North America) or by email at corporateactions@computershare.com.

If you are a Non-Registered Shareholder that holds MTS common shares through an intermediary, such as a broker, investment dealer, bank or trust company, you should carefully follow the instructions and deadlines from the intermediary that holds shares on your behalf and should contact such intermediary with any questions about your election. Shareholders who may have made an election through an intermediary prior to February 15, 2017, may wish to contact their intermediary prior to the Election Deadline to verify that their election has been made properly.

When is the Election Deadline?
The closing date for the plan of arrangement has been set for March 17, 2017. As a result, the Election Deadline will be 5:00 p.m. (Toronto time) on March 14, 2017.

What happens if I do not make an election?
Any MTS shareholder who fails to properly make an election prior to 5:00 p.m. (Toronto time) on March 14, 2017 will be deemed to have elected to receive, for each MTS common share, the cash consideration, subject to proration and rounding. MTS recommends that MTS shareholders take the necessary steps to ensure that their Letter of Transmittal and Election Form is returned to Computershare Trust Company of Canada by 5:00 p.m. (Toronto time) on March 14, 2017. There can be no guarantee that Canada Post will be able to deliver the Letter of Transmittal and Election Form and enclosures by such time, and MTS shareholders using a courier service or mailing through Canada Post, by regular post, registered mail or otherwise, do so at their own risk.

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. Therefore, shareholders may ultimately receive a combination of cash and BCE common shares by operation of the proration provisions of the plan of arrangement.

An MTS shareholder who has elected to receive share consideration or cash consideration but, because of proration, receives a combination of BCE common shares and cash, will be required to make a joint election to obtain a full or partial tax deferral. A tax instruction letter providing certain instructions on how to complete the tax election will be available on this page (in the Download Centre) towards the completion of the plan of arrangement, which has been set for March 17, 2017.

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 Computershare Trust Company of Canada.

When will the plan of arrangement be completed?
The closing of the plan of arrangement has been set for March 17, 2017.

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 March 17, 2017.

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 or have already received a Letter of Transmittal and Election Form that you must complete and return with the certificate(s) (if applicable) representing your MTS common shares to Computershare Trust Company of Canada. Computershare Trust Company of Canada will mail you a cheque and/or a direct registration system statement by first class mail as soon as practicable after March 17, 2017, or upon receipt of your completed Letter of Transmittal and Election Form and of your MTS common share certificate(s).

Non-registered shareholders that hold MTS common shares through an intermediary, such as a broker, investment dealer, bank or trust company have probably received the election form and already provided their election to such intermediary or should do so.   Non-registered shareholders who have questions or have made an election through an intermediary prior to February 15, 2017, may wish to contact their intermediary prior to the Election Deadline to verify that their election has been made properly.

Should I send in my share certificates now?
Yes if you did not. Some registered shareholders may already have returned a duly completed letter of transmittal and election form, together with the certificates representing their MTS common shares.  The Letter of Transmittal and Election Form were mailed last November.  Any question and request for another copy should be directed to Computershare Trust Company of Canada by phone at 1 877 982-8757 (toll free in North America) or by email at corporateactions@computershare.com.


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) towards the completion of the plan of arrangement, which has been set for March 17, 2017.


WHO TO CALL WITH QUESTIONS 

Who can I contact if I have questions?
Registered shareholders with any questions regarding receipt of the cash or share consideration, including any request for another copy of the letter of transmittal and election form, should be directed to Computershare Trust Company of Canada by phone at 1-877-982-8757 (toll free in North America) or by email at corporateactions@computershare.com.

Non-registered shareholders should contact their intermediary (broker, investment dealer, bank or trust company).

 

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