After crunching through multiple bids, MTS has finally agreed to sell its subsidiary, Allstream, to Zayo Group Holdings Inc. (Zayo), a provider of communication infrastructure, in an all-cash transaction for $465 million, the company announced today.
“This transaction is the outcome of a comprehensive process which left no stone unturned,” said Jay Forbes, President and CEO. “We engaged with a variety of potential strategic and financial buyers in a very orderly process. We believe this transaction maximizes the value of a stabilized and renewed Allstream, is in the best interests of the Company, and positions both MTS and Allstream for long term success in a competitive telecom marketplace.”
“We are delivering on our complete turnaround and planned exit from Allstream, with the value of the business fully recognized through a sale process we feel confident has a high certainty of closing,” added Mr. Forbes. “The acquisition by Zayo represents a new beginning for Allstream and a significant new evolution in the competitive landscape of Canadian telecoms.”
The transaction was approved by the MTS Board of Directors and is expected to close in the first quarter of 2016, after it clears its pension-related obligations and receives the necessary approval from regulators, including from national security and the Competition Bureau.
As a direct result of the sales agreement, MTS will be focusing on transforming itself into a “more customer-first business”, the press release states. As Jay Forbes, President and CEO of MTS states, the carrier has a new team, a new strategy and a new future.
MTS is expected to realize net proceeds of roughly $425 million, which will be subject to a number of capital allocation options.