It’s been met with mixed reviews so far -- this union of media behemoths BCE Inc. (T.BCE) and Quebec-based Astral Media (T.ACM.A)-- and in many circles, it was the business story of the week. Some pundits in outlets such as the Globe and Mail called it "another brick in the wall of bland."
But at least one person in the know is singing the merger’s praises. A piece in that selfsame Globe and Mail Monday quoted analyst Maher Yaghi of Desjardins Securities Inc. as saying the deal is strategically and financially sound, something that should help the Montreal-based telecom realize its goal of a stable dividend growth model for shareholders.
"We believe the most important rationale for this acquisition is to increase the French content in Bell’s media portfolio as the company tries to deepen its penetration of the Quebec TV market with the launch of IPTV," said Yaghi.
The Globe piece also quoted Yaghi as saying that BCE is acquiring a solid media company that has grown revenue and EBITDA at a compound annual growth rate of 11% over the last five years. By combining the assets of Astral, Bell will reduce its reliance on wireline assets, which will allow it to reposition its asset base toward growth businesses such as wireless and media.
Yaghi maintained his "buy--average risk" rating and raised his price target 20 cents to $43.20 per share.
Once known as Bell Canada Enterprises, and once the home of one of Canada’s greatest monopolies, BCE Inc. remains nonetheless Canada's largest communications company, priding itself on "a comprehensive and innovative suite of broadband communication services to residential and business customers in Canada," according to the corporate website.
The company reaches into such areas as high-speed Fibe Internet, Fibe TV, Satellite TV, Bell Mobility and Virgin Mobile, Home Phone local and long distance services as well as IP-broadband services
For its part, Astral is the owner of such reputable TV and radio outlets as Virgin radio and her AM sister, CFRB 1010 in Toronto, the news/talk authority in Canada’s biggest city. The group also operates several media properties -- pay and specialty television, out-of-home advertising, and digital -- that are among the most popular in the country.
BCE traded late Monday at $39.71, or seven cents higher than Friday’s close, having hit a 52-week high late January at an even $43.00. Its depth for the period was plumbed on March 23 of last year at $34.92. Astral stock dipped 15 cents Monday from its 52-week peak on Friday, the day of the merger to $48.40. Its low for the same period was $31.00, to which it fell September 23.
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