Rogers Wireless trumps Telus with $1.4B bid for Microcell

Last Updated: Tuesday, September 21, 2004 | 1:26 PM ET

CBC News

Rogers Wireless is buying Microcell Telecommunications, the operator of the Fido cellphone network, in a friendly $1.4 billion cash takeover, the companies said Monday.

The deal would make Rogers Wireless the largest wireless company in Canada with 5.1 million voice and data customers. Bell Mobility would be bumped to number two position, with 4.5 million subscribers.

Rogers Wireless said it will pay $35 apiece for Microcell's Class A restricted voting shares and Class B non-voting shares. It will also offer to purchase Microcell's 2005 warrants for $15.79 and 2008 warrants for $15.01.

• BACKGROUND: Cellphones

In the wake of the announcement, shares of Microcell's B shares gained more than 6 per cent on the TSX. The stock was up $2.09 at $34.95. Rogers Wireless was off 13 cents at $38.22, while Rogers Communications eased 35 cents to $25.40.

The deal, which is subject to regulatory approvals and Microcell shareholder acceptance, is expected to close by the end of the year.

Microcell board recommends deal to shareholders

The board of directors of Microcell have already agreed to the Rogers offer and is recommending shareholders accept the deal.

"This transaction will position Rogers to better compete against incumbent telco wireless operators in Canada," said Ted Rogers, the president and CEO of Rogers Communications, the parent company of Rogers Wireless.

"It also ensures a healthy, competitive marketplace and all of the associated benefits for wireless customers across Canada," he said.

Last week, Rogers Wireless signalled its interest in acquiring Microcell when it filed a request for an advance ruling with the Canadian Competition Bureau related to a possible offer to acquire its competitor.

Telus Corp., the country's second largest phone company, has already launched a $1.1-billion takeover bid for Microcell. But Microcell's board rejected that offer as inadequate.

• FROM Sept. 16, 2004: Rogers Wireless signals interest in Microcell

"We believe that this (Rogers) transaction constitutes an attractive opportunity for our customers and our shareholders alike," Microcell's president and CEO Andre Tremblay said.

"It allows for the continuation of the Fido brand in the marketplace, ensures our customers will continue to receive excellent service and offers them the benefit, upon closing, of significantly enhanced wireless coverage across Canada," he said.

Rogers will finance the takeover through its banking credit facilty and a bridge loan of up to $900 million from Rogers Communications.