BCE (TSE:BCE) to acquire remainder of Q9 Networks for $675m

BCE Inc. (TSE:BCE, Mkt cap 54.96B, P/E 20.00, Div/yield 0.68/4.32, EPS 3.16, Shares 868.62M) is buying out the remainder of data centre operator Q9 Networks Inc. for $675-million as it looks to make ground in the burgeoning hosting and cloud services sector, The Globe and Mail reports.

Back in 2012, the Montreal-based firm took a 35.4% share in Q9 as part of $1.1-billion takeover by a consortium of investors.

BCE has now made the move to buy out its fellow investors, Ontario Teachers’ Pension Plan and U.S. private equity firms Providence Equity Partners and Madison Dearborn Partners.

The $675-million transaction, which include the assumption of the data centre operator’s debt, will give BCE the platform to compete with fellow Canadian telecom providers and major U.S. and global tech and cloud-computing players in the data centre and services space.

“The acquisition supports Bell’s ability to compete against domestic and international providers in the growing outsourced data services sector,” BCE said in a brief statement, adding that it expects to tie-up the deal by the end of the year.

Commenting on the deal, Citigroup Global Markets Inc. analyst Michael Rollins highlights the market entry of Zayo, the U.S. company that acquired Allstream Inc. in January, and the launching of new offerings by Rogers Communications Inc. as evidence that the enterprise category is getting increasingly competitive.

Since its original investment in Q9 in 2012, BCE has had a say in the running of 27 Q9 data centres, and the new deal will build on that existing relationship, rather than radically change it.

“We’re not announcing any changes to Q9 operations,” BCE spokesman Mark Langton confirmed.

BCE did not disclose exactly how much it is paying its former partners in cash for the balance of the company, stating only that the deal includes Q9’s net debt but not BCE’s existing ownership interest.

BCE Inc. (TSE:BCE) is a Verdun QC based communications company. The Company provides residential, business and wholesale customers with a range of solutions to all their communications needs, including wireless, high-speed Internet, Internet protocol television (IPTV) and satellite TV, business Internet protocol (IP) broadband, and information and communications technology (ICT) services. The Company’s segments include Bell Wireless, Bell Wireline and Bell Media. The Company’s Bell Wireless segment provides wireless services that are available to virtually all of the Canadian population. The Bell Wireline segment includes voice and data network; high-speed fiber deployment, and bell direct to home (DTH) satellite television service. The Company’s Bell Media segment offers specialty and pay television, radio, digital media and out-of-home advertising. The Company, through Bell media, operates approximately 110 radio stations in over 50 markets across Canada. More from Reuters » 

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