BCE, Inc. (NYSE:BCE) stock is moving lower on Monday after the company's subsidiary, Bell Canada, entered into a definitive acquisition agreement to acquire Ziply Fiber. Also, BCE said it will pause dividend growth.
What To Know: Under the agreement, the company will acquire 100% equity in Ziply Fiber in exchange for about $3.65 billion. Bell is anticipated to use its net proceeds from its sale of ownership interest in Maple Leaf Sports & Entertainment to fund the acquisition.
The closing of the sale of ownership interest in Maple Leaf Sports may occur after the closing of this acquisition. In that case, the company will utilize a loan facility to finance this deal. In addition, Bell will utilize funds from a discounted treasury dividend reinvestment plan (DRP) program.
The goal of the merger is to expand Bell's fiber network into the United States, adding around 1.3 million fiber locations. This acquisition will also strengthen Bell's position as the third-largest fiber Internet provider in North America, bringing its total to 9 million fiber locations, with plans to reach over 12 million by the end of 2028.
Mirko Bibic, president & CEO, BCE and Bell Canada, said "This acquisition marks a bold milestone in Bell's history as we lean into our fibre expertise and expand our reach beyond our Canadian borders. Fibre is at the heart of what we do, and we're proud to connect people and businesses and enable them to do more through our fibre networks. By bringing together Bell and Ziply Fiber's exceptional talent, we'll accelerate our growth while continuing to deliver significant value for our customers and shareholders."
Bell said that it intends to maintain its annual common share dividend at the current level of $3.99 per share through the end of 2025.
The company said, "In the context of the strategic acquisition of Ziply Fiber, BCE's focus is on long-term value creation for shareholders and BCE intends to pause dividend growth until BCE's dividend payout and net debt leverage ratios are tracking towards our target policy ranges, subject to review annually by the BCE Board of Directors."
BCE Price Action: At the time of writing, BCE stock is trading 9.16% lower at $29.16, according to data from Benzinga Pro.
Image: 962355 from Pixabay.
