BCE CEO George Cope, and Astral Media CEO Ian Greenberg share a laugh after a news conference in Montreal March 16, 2012.CHRISTINNE MUSCHI/Reuters
BCE Inc. will find out shortly whether it will be allowed by Canada's broadcast regulator to take over Astral Media, and if so, on what conditions. Short of an outright block by the regulator, the merger contract means that BCE will have to go through with the deal even if there are onerous conditions.
That's because the contract has what some in deal circles call a "hell or high water clause" that specifies that BCE will have a hard time backing out of the deal if it's simply a matter of not liking conditions imposed by the Canadian Radio-Television and Telecommunications Commission.
Under the contract, BCE is bound to "use any and all efforts and take any and all actions and steps required or advisable to obtain the CRTC Substantive Approval, including accepting, negotiating, offering to take and, if such offer is accepted, effecting by consent agreement or order, hold separate arrangement, undertaking or otherwise, the divestiture of assets, or undertaking any form of behavioural remedy or other measure as specified by the CRTC."
BCE warned that the economics of the deal could suffer. "Asset divestitures or modifications to service distribution could eliminate potential synergies and cost savings opportunities or lessen the anticipated benefits of the Arrangement to BCE."
To ensure BCE doesn't give too easily if the commission asks for onerous concessions, Astral has a strong voice in any negotiations with the CRTC. BCE is not allowed to "enter into any agreement with the CRTC to not consummate the Trust Arrangements or the Acquisition of Control, except with the consent of Astral."
If a deal can't be reached, and the CRTC outright blocks the transaction, BCE must pay $125-million to Astral.