In the News : : Rogers Microcell Deal

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In the News Rogers Microcell Deal

• Team Fusion

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Corporate Takeovers

• Corporate control is changing the business
  landscape
• Control transactions involve
• takeovers
• mergers
• leveraged buyouts

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Microcell Takeover Offers

• Telus attempted a hostile takeover
• Rogers bid 1.4 billion in a friendly takeover
• Telus and Rogers takeover strategies would
  consolidate major players to three
• Rogers
• Telus
• Bell

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Hostile Takeovers

• A takeover attempt resisted by target firm
• Acquirer sees value in target acquisition
• Target may be reasonably priced
• An acquisition may offer advantages
• Can damage company morale
• Could create animosity towards acquirer
• Occurs only through publicly traded shares
• Acquirer must bypass board of directors to
  purchase shares

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Non-Hostile Takeovers

• Friendly takeover where company agrees to be
  purchased
• Consists of straight company buyout
• May take place for a variety of reasons
• Usually a sign of productive activity
• Generally endorsed by target

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Takeover Perspective - Rogers

• Takeover would make them largest Canadian
  wireless provider
• Transaction positions them to better compete
• Ensures healthy marketplace and benefits
  customers
• Fido brand is well-known
• Merger is not without risk
• Strategy indicates intention to compete with Bell
  and Telus

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Target Perspective - Microcell

• In 2003 Microcell was re-establishing itself
• Telus bid 1.1 billion in hostile takeover
• Rogers bid 1.4 billion in a friendly takeover
• Microcell supported the Rogers bid
• Without merger Microcell would face challenges

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Rogers/Microcell Deal

• 35 a share to buy Microcell
• Takeover to be financed with
• 700 million credit line
• cash on hand
• 900 million from Rogers Communications
• totaling 1.6 billion
• Acquisition will propel Rogers among top wireless
  operators

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Industry Implications

• Rogers is a better match for Microcell
• Leaves Canada with 3 wireless providers.
• Rogers network will be enhanced
• Telus/Microcell deal would result in 33 market
  share
• Rogers/Microcell combination result in 35 market
  share

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Industry Implications

• Rogers gains synergy
• Removes a competitor
• Fido customers can access Rogers network
• Combined network enables new technologies
• Rates unlikely to rise from increased competition
• Merger removes price-aggressive competitor