BCE to purchase MTS

• MTS shareholders to receive $40.00 per share, in combination of cash and BCE shares
• Winnipeg to become headquarters for BCE's 6,900-person Western Operations
• BCE to invest $1 billion over five years after closing to bring next-generation internet, wireless and television products to Manitoba customers, and provide other meaningful commitments to Manitobans

WINNIPEG, May 2, 2016 /CNW/ - (TSX: MBT) Manitoba Telecom Services Inc. (MTS) today announced it has entered into a definitive arrangement agreement pursuant to which BCE Inc. (BCE) (TSX, NYSE: BCE) will purchase all of the issued and outstanding common shares of MTS under terms that contain compelling benefits for our shareholders, our customers, our employees and will support long term growth and prosperity in the Province of Manitoba. The transaction is valued at $3.9 billion. The transaction has been unanimously approved by the Board of Directors of each of MTS and BCE and is supported by the management teams of both companies.

"This transaction recognizes the intrinsic value of MTS and will deliver immediate and meaningful value to MTS shareholders, while offering strong benefits to MTS customers and employees, and to the Province of Manitoba," said Jay Forbes, President & CEO, MTS. "We are proud of our history and what we have achieved as an independent company. We believe the proposed transaction we are announcing today with BCE will allow MTS to build on our successful past and achieve even more in the future."

"BCE looks forward to being part of Manitoba's strong growth prospects, building on the tremendous MTS legacy of technological innovation, customer service and competitive success by delivering the best broadband, wireless, internet and TV services to the people of Manitoba in communities large and small," said George Cope, President & CEO of BCE. "As the headquarters for the Western operations of BCE, Bell MTS will focus on delivering the benefits of new broadband communications infrastructure, ongoing technology development and enhanced community investment to Manitobans everywhere."

BCE has offered to purchase all of the issued and outstanding common shares of MTS for $40.00 per share, representing a premium of 23.2% based on the volume weighted average closing price on the Toronto Stock Exchange of MTS' common shares for the last twenty trading days, and values MTS at approximately 10.1 times 2016 estimated EBITDA (less deferred wireless costs) based on the latest consensus estimates, and 9.5 times including the present value of tax assets. MTS shareholders will be able to elect to receive $40.00 per share in cash or 0.6756 of a BCE common share for each MTS common share, subject to proration, such that the aggregate consideration to be paid to MTS shareholders will be 45% in cash and 55% in BCE common shares. The share consideration is based on BCE's twenty trading day volume weighted average price of $59.21 on the Toronto Stock Exchange. In connection with the arrangement, the Board of Directors of MTS will not declare any further dividends on MTS' common shares other than being permitted to declare a second-quarter 2016 dividend in May to be paid in July.

Compelling Benefits for Manitoba
The transaction is expected to provide significant benefits to MTS customers and employees, and to the Province of Manitoba. These include significant investments, access to innovative consumer and enterprise telecommunications products and support to the local community.

BCE intends to invest $1 billion in the five years after the transaction closes to:

• Make Gigabit Fibe Internet, offering average access speeds up to 20 times faster than what MTS customers receive today, available within 12 months after the transaction closes,
• Expand the mobile LTE network and make improvements to mobile data speeds that will double our customer's average download speeds, and
• Provide access to Fibe TV, North America's most innovative TV platform.

"This transaction would benefit all Manitoba telecommunications customers," said Forbes. "A successful national operator like Bell has the scale, reach and financial strength to offer better access to advanced services for more Manitoba consumers and businesses, and to compete and invest in the province's infrastructure in the long term."

BCE values the talent and skills of MTS people and has committed to making Winnipeg its headquarters for Western Canada, which with the addition of the MTS team will have a total of approximately 6,900 employees.

MTS' data centre is expected to join BCE's network of 27 large data centres and gain access to the largest broadband fibre network in Canada.

BCE will maintain a strong and important position within the local community, ensuring that naming rights for the home of the Winnipeg Jets and other community sponsorships are maintained or extended. Additionally, BCE will introduce a new Bell Let's Talk Manitoba fund focused on mental health support for aboriginal communities chaired by Manitoban Clara Hughes, the national spokesperson for Bell Let's Talk.

Structure, Timing and Approvals of Proposed Transaction
The transaction is structured to proceed by way of a court approved plan of arrangement under The Corporations Act (Manitoba) pursuant to which BCE will purchase all of the issued and outstanding common shares of MTS subject to shareholder approval from two-thirds of the votes cast by MTS shareholders and satisfaction of other required approvals, including receipt of regulatory approvals by the Canadian Radio-television and Telecommunications Commission (CRTC), the Competition Bureau and Innovation, Science and Economic Development Canada (ISED). 

The Board of Directors of MTS unanimously recommends that MTS shareholders vote in favour of the plan of arrangement, which is expected to be subject to a special meeting of shareholders held in late June of 2016. The Board of Directors of MTS has obtained a fairness opinion from each of Barclays Capital Canada Inc., CIBC World Markets Inc. and TD Securities Inc. that, as of May 1, 2016, and subject to the assumptions, limitations and qualifications on which such opinions are based, the consideration to be received by MTS shareholders is fair, from a financial point of view, to such shareholders.

The arrangement agreement between MTS and BCE provides for, among other things, a non-solicitation covenant on the part of MTS, subject to customary "fiduciary out" provisions that entitle MTS to consider and accept an acquisition proposal that constitutes or may reasonably be expected to constitute a superior proposal and a right in favour of BCE to match any superior proposal. If the arrangement agreement is terminated in certain circumstances, including if MTS enters into a definitive agreement with respect to a superior proposal, BCE is entitled to a break-fee payment of $120 million. The transaction also includes a reverse break-fee payment of $120 million payable by BCE in certain circumstances. The transaction is currently expected to close in late 2016 or early 2017.

Further information regarding the transaction will be included in MTS' management information circular to be mailed to MTS shareholders in advance of the special meeting and in MTS' material change report in respect of the announcement of the transaction, each of which will be filed with the Canadian securities regulators and will be available at www.sedar.com. Further details will be forthcoming in a material change report and a copy of the arrangement agreement will also be posted on www.sedar.com.

Advisors and Legal Counsel
MTS' financial advisors are Barclays Capital Canada Inc., CIBC World Markets Inc. and TD Securities Inc. Aikins MacAulay & Thorvaldson LLP and Stikeman Elliott LLP are serving as legal counsel to MTS. Drysdale Forstner Hamilton Public Affairs is serving as public affairs and communications counsel to MTS.

Call with Financial Analysts
BCE will host a conference call for financial analysts on Monday, May 2 at 8:30 am eastern time. MTS President & CEO Jay Forbes will provide remarks during the call. To participate, please dial 416-340-2216 or toll-free 1-866-223-7781 before the start of the call. A replay will be available for one week by dialing 905-694-9451 or 1-800-408-3053, passcode 5493892. A live audio webcast of the conference call will be available on the www.bce.ca and www.mts.ca websites.

Forward-looking statements disclaimer
This news release includes forward-looking statements and information (collectively, the "forward-looking statements") including, but not limited to: forward-looking statements pertaining to the purchase by BCE of all the issued and outstanding common shares of MTS; the expected benefits of the transaction, including the expected benefits to shareholders, customers, employees and other stakeholders as well as future financial and operating results; the anticipated timing for the special meeting of MTS shareholders and closing of the transaction; the consideration to be received by shareholders, which may fluctuate in value due to BCE common shares forming part of the consideration and the consideration not being as elected by MTS shareholders due to proration; the satisfaction of closing conditions including, without limitation (i) the approval of the CRTC, Competition Bureau and ISED; (ii) required MTS shareholder approval; (iii) necessary court approval in connection with the plan of arrangement, (iv) certain termination rights available to the parties under the arrangement agreement; (v) BCE obtaining the necessary approvals from the Toronto Stock Exchange and New York Stock Exchange, as applicable, for the listing of its common shares in connection with the transaction; and (vi) other closing conditions, including, without limitation, the operation and performance of the MTS business in the ordinary course until closing of the transaction and compliance by MTS with various covenants contained in the arrangement agreement; the anticipated benefits to, and expected investments in, the Province of Manitoba as a result of the transaction, all of which are subject to risks, uncertainties and assumptions.

As a consequence, actual results in the future may differ materially from any expectation, conclusion, forecast or projection in such forward-looking statements. Therefore, forward-looking statements should be considered carefully and undue reliance should not be placed on them. Examples of statements that constitute forward-looking information may be identified by words such as "believe", "expect", "project", "should", "anticipate", "could", "target", "forecast", "intend", "plan", "outlook", "see", "set", "pending", and other similar terms. All forward-looking statements are made pursuant to the safe harbour provisions of applicable Canadian securities legislation.

Forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to: the potential risk that the transaction will not be approved by MTS shareholders; failure to, in a timely manner, or at all, obtain the necessary regulatory, stock exchange and court approvals for the transaction or any transaction ancillary thereto; failure of the parties to otherwise satisfy the conditions to complete the transaction; the possibility that the Board of Directors of MTS could receive an acquisition proposal and approve a superior proposal; the effect of the announcement of the transaction on MTS' and BCE's respective strategic relationships, operating results and business generally; significant transaction costs or unknown liabilities; the risk of litigation or adverse actions or awards that would prevent or hinder the completion of the transaction; failure to realize the expected benefits of the transaction; BCE's financial condition prior to the expected closing date; compliance with all applicable laws and other customary risks associated with transactions of this nature; and general economic conditions. In addition, if the transaction is not completed, and MTS continues as an independent entity, there are serious risks that the announcement of the transaction and the dedication of substantial resources of MTS to the completion of the transaction could have an adverse impact on MTS' business and strategic relationships (including with future and prospective employees, customers, retailers, vendors, suppliers and partners), operating results and businesses generally. As a consequence, actual results in the future may differ materially from any forward-looking statement, forecast or projection, whether expressed or implied. Therefore, forward-looking statements should be considered carefully and undue reliance should not be placed on them.

Please note that forward-looking statements in this news release reflect Management's expectations as of the date hereof, and thus are subject to change thereafter. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. This news release has been approved by the Board of Directors of MTS. Factors that could cause anticipated opportunities and actual results to differ materially include, but are not limited to, matters referred to above and those matters identified in the Risks and uncertainties section and elsewhere in our 2015 annual MD&A and the material change report filed that will be filed in respect of this transaction, which are, or will be, available on our website at www.mts.ca/aboutus and on SEDAR.

About MTS
At MTS, we're proud to be Manitoba's leading information and communications technology provider. We're dedicated to delivering a full suite of services for Manitobans – Internet, Wireless, TV, Phone Service and Security Systems plus a full suite of Information Solutions, including Unified Cloud and Managed Services. You can count on MTS to make connecting your world easy. We're with you.

We live where we work and actively give back to organizations that strengthen our communities. Through MTS Future First, we provide sponsorships, grants and scholarships, value-in-kind support and volunteer commitment in Manitoba.

MTS Inc. is wholly owned by Manitoba Telecom Services Inc. (TSX: MBT). For more on MTS' products and services, visit mts.ca. For investor information, visit www.mts.ca/aboutus.

SOURCE MTS

Investors: Brenda McInnes, Investor Relations, 204-941-6205, [email protected]; Media: Greg Burch, Corporate Communications, 204-250-9244, [email protected]