Saturday, 2 June 2012

BCE/Astral Deal Getting Closer to Closing

Awhile back, shareholders of Astral Media had a vote on whether or not to accept the offer that BCE made to acquire Astral. The result was 99.8% of shareholders accepted the offer. This is good news because that was one more hurdle that was cleared in the acquisition.

The next step was to get approval by the Quebec Superior Court. This went smoothly as well and the deal is expected to be closed in the second half of the year. When a more specific date is determined, shareholders will receive information explaining how to deposit and obtain payment for their shares of Astral.

I previously mentioned that Bell intends to pay in the form of cash & BCE shares; which is fine by me. In fact, I'd rather get all BCE shares if I could, that would increase my position in Bell and increase my overall dividend yield. I'd also avoid the fees associated with using cash to purchase shares (which I would do with the cash received as payment).

The CEO, Ian Greenberg, was suppose to receive $25M as part of a "bonus and retention plan". The Greenberg family also holds 65000 "special shares" that are not traded. BCE offered to buy the non-voting A shares for $50 apiece, $54.83 for voting B shares and a whopping $769.23 for each special share (a total of $50M for the "special shares"). Mr. Greenberg and his brother Sidney, a vice-president, will receive another $57-million to exercise their options and cash out their shares. The two brothers will also get a slice of the change-of-control payments worth $6.8-million.

Some shareholders are not happy about this and argue that they are being treated unfairly since the Greenbergs are receiving quite the premium on their shares. However, all is not lost because the shareholders voted against the $25M "bonus and retention plan" and the company decided to pull it. It should be noted that Astral wasn't obligated to run a vote on the issue of additional payment to management but thought it was a "good governance measure." I respect the company for running a vote because it shows that Astral is accountable to the shareholders as a whole and that their interest are kept in mind. It also shows that shareholders do in fact have some power and can control the direction that a company is headed.

So far so good and if everything goes according to plan, I may have a nice little win in a few months. I'm keeping my fingers crossed.

-the Paperboy

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