There is always some excitement in the Canadian wireless market and it continues – this time between GLENTEL, Bell and Rogers. As many of you may already know, GLENTEL is the largest independent retailer of wireless devices in Canada. They own Wireless Wave, T-Booth and many other retail names and they sell devices and plans in Canada from Rogers, Bell, Virgin, Fido, Chatr and SaskTel. GLENTEL employs over 4,670 employees and operates out of approximately 1,400 locations – 494 retail locations in Canada, 735 locations in the U.S. and 147 retail locations in Australia and the Philippines.
Last month, GLENTEL announced that they filed paperwork to have Bell acquire them for $670 million. When Rogers got wind of this, they promptly filed an injunction with the Ontario Superior Court of Justice to block the sale. Rogers' position is that within its agreement with GLENTEL, it requires that Rogers must give prior approval to any sort of transaction that would change control of GLENTEL. Of course, GLENTEL says that Rogers' claim is meritless and they are able to sell to whomever they want and on its own terms.
Tom Skidmore, GLENTEL President and CEO laid it all out when he said: "For over 25 years, GLENTEL has distributed Rogers' mobile products through our Canadian retail stores and we hope to continue to do so. The BCE acquisition does not affect GLENTEL's agreement with Rogers, which will continue to remain in force after the acquisition completes. Rogers has the right to remove their products from our Canadian stores if they choose or to terminate its agreement with us, but has no right under its agreement to block the acquisition of GLENTEL, which operates in Canada, the United States, Australia and the Philippines. Rogers' claim is without merit and we will certainly defend against it. Approval of the acquisition is up to GLENTEL's shareholders, not one of our many suppliers, and we look forward to closing the acquisition in early 2015."
In an email from Rogers to Mobile Syrup they said, "We value our relationship with GLENTEL and they continue to offer our products in their stores. This court case is about protecting our rights – we're asking the Court to ensure they honour our agreement, which says they required our prior consent to a change in ownership." It does seem odd that a retailer (GLENTEL) would allow such wording in a contract with a supplier (Rogers), but it is something that might have slipped past GLENTEL's attorney's diligent eyes. It will be interesting to see if the original contract does require prior approval by Rogers, and if so, what will they do? According to the terms of the deal between GLENTEL and Bell, there is a clause that if the deal is not completed due to "competition approval reasons," Bell would have to pay GLENTEL a reverse break fee of $33.6 million…and I am betting Rogers would 'hate' to see that happen.