Telus Drops Third Takeover Bid for Mobilicity

by Istvan Fekete on May 22, 2014

Telus has decided to drop its $350 million takeover bid for struggling wireless startup Mobilicity, ending an effort to acquire the valuable wireless spectrum and subscribers of the small carrier, reports the Globe and Mail.

“A source said Vancouver-based Telus sent word of its decision to Mobilicity on Tuesday, informing that it was withdrawing its offer because conditions of the deal had not been met. Telus is now “no longer in the mix” to obtain Mobilicity,” the source said.

The source did not say which conditions had not been met. However, one requirement was that Ottawa approve the transfer of spectrum between Mobilicity and Telus – a transaction the government has consistently opposed.

You may recall that the federal government has unofficially warned that it would take retaliatory measures if Canada’s No. 2 wireless player didn’t drop its third bid on Mobilicity, because it is trying to take over wireless spectrum set aside for new players.

Telus’ move may be strongly related to this unofficial announcement. However, it leaves Mobilicity and its subscribers, as well as its investors, in limbo, as there is no solid bidder to take over its business.

We must note here, though, that Mobilicity indicated to the CCAA court that the Telus offer was the only acceptable one. But we are not excluding the possibility of “magically” finding another new acceptable offer.

In this scenario, Quebecor seems to be the only viable solution and the clear winner. The wireless player, which revealed its expansion plans through its bid on the 700 MHz spectrum auction, was said to be in talks with Mobilicity, but it allegedly made a “lowball” offer.

Now that Telus and the other two incumbents have been ousted from the “mix” of parties bidding on Mobilicity, this leaves room for Quebecor to place an official bid, which will likely be accepted by the struggling carrier’s investors.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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