Bell Canada buys 750 The Source storesMar. 09, 2009 Source: The Toronto Star, March 2, 2009,Dana Flavelle, Business Reporter Bell Canada has announced it has agreed to buy The Source by Circuit City, instantly giving it 750 stores in busy malls that will sell Bell's telephone, TV and internet services as well as a full range of consumer electronics. Terms of the deal were not disclosed. Bell Canada, which operates its own Bell retail stores, said The Source would continue to operate as a separate consumer electronics chain, but also offer all of Bell's consumer services by next January. These include Bell Mobility, Solo Mobile and potentially Virgin Mobile wireless products and services, Bell TV, high-speed Bell Internet and Bell home phone products. "Expanding the number of places people can buy Bell products is a core element in the execution of Bell's strategy to achieve our goal: To be recognized by customers as Canada's leading communications company," said George Cop, president and chief executive officer of Bell and BCE. The Source would maintain its well-known national brand, broad range of communications, computing and audio products, and its seasoned management team to be led by Ron Cuthbertson, a respected 30-year retail veteran and most recently president of The Source, Bell said. "The Source is a respected leader in consumer electronics retailing right across Canada. Its acquisition supports Bell's strategic imperatives to accelerate wireless and leverage momentum in wireline services like Bell TV, Bell Internet and Bell Home Phone," Cope said. "With its strong national presence, brand, and management team, acquiring The Source represents a competitive and cost-effective approach to ensuring Bell's leadership in delivering the best communications products to Canadians," Cope said in a statement. "The Source's new relationship with Bell will make the most of the combined strengths of both organizations in terms of products, service and national brand strength," Cuthbertson said in a statement. "Combining Bell's industry-leading roster of communications services with the brand, distribution presence, and consumer retailing expertise of The Source will contribute positively to the long-term growth of both businesses going forward." The Source was put up for sale last fall after its U.S parent company, Circuit City Stores, filed for Chapter 11 bankruptcy protection amid weakening economic conditions. The Canadian division remained profitable but relied on a shared credit facility that was frozen in the U.S. filing. The Source then followed Circuit City into voluntary bankruptcy protection in Canada. The Source has a track record of profitability over the past seven years. Its 12-month revenue as of Dec. 31 was $643 million while earnings before interest, taxes, depreciation and amortization was $27 million. More than 70 per cent of Canadians live within five kilometres of stores operated or licensed by The Source, and more than 80 million technology-savvy consumers shop at The Source each year. Bell is acquiring substantially all of the assets of The Source, which was acquired by Circuit City Stores, Inc. in March 2004. On November 10, 2008, Circuit City and certain of its U.S. subsidiaries voluntarily commenced bankruptcy proceedings under Chapter 11 of the United States Bankruptcy Code. The Source commenced a voluntary proceeding under the Companies' Creditors Arrangement Act (CCAA). Bell is acquiring The Source pursuant to the court monitored sale process being managed by NM Rothschild & Sons Canada Ltd. in connection with the proceedings under the CCAA. Subject to court approval and other customary conditions to closing, the transaction is expected to close in the third quarter of this year. Due to the nature of the sale process and at the request of The Source, Bell does not expect to disclose the purchase price until after the completion of the transaction. |