This paper will discuss the acquisition of Microcell's Fido brand (Fido) by Rogers Wireless. The key points that will be discussed are: How the companies were before and after the acquisition (financially), if the merger beneficial, what was the share price for each company before the merger and what was the price of Rogers Wireless after the merger. Why the acquisition took place, and if Rogers Wireless created value will also be discussed.
Before the Acquisition
Mircocell, which previously owned Fido, was the fourth largest wireless provider prior to Fido's acquisition in November 2004. Fido had 1,293,800 customers (Blundon, Stephen, 2004) and generated revenues of $538 million (Microcell Annually and Quarterly report, 2004).
Rogers Communication Inc. (RCI) is a diversified Canadian communications consisting of Rogers Wireless, Rogers Cable and Rogers Media, each of which is wholly-owned subsidiaries of RCI. In 2004, Rogers Wireless had 3.8 million subscribers and generated revenues of 2,784 million by the year end of 2004.
After the Acquisition
After acquisition of Fido, Rogers Wireless Inc. became Canada's largest wireless voice and data provider and the choice of nearly 5.7 million of subscribers as of November 2004 (2004 Annual Report, p16).
Benefits of the Acquisition Fido by Rogers Wireless:
From the point of view of the customers, the only benefit of the acquisition of Fido is that Fido customers have a bigger phone network which operates across Canada. For those areas that Fido customers did not have access to before, they can now use the Rogers network. As a result of the acquisition, the network coverage will become larger after the two companies amalgamate the phone network. Beside the larger network, a ...