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Bell Canada’s $1.1 Billion Q9 Networks Deal: What Happened

Bell was one of four parties in the 2012 C$1.1 billion Q9 Networks acquisition. Here’s what the group bought, how announced equity funding changed by closing, and why the 2016 BCE transaction was separate.
From TheFinanceBase Team2 min to read
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Bell did not buy Q9 Networks alone. In June 2012, BCE Inc. (Bell) and three investment partners agreed to acquire all of Q9 for C$1.1 billion; the investor group completed the transaction in October 2012. Bell’s stated aim was to pair Q9’s data-centre services with Bell’s network. BCE later acquired the Q9 equity it did not already own in 2016, a separate transaction.

What the 2012 deal involved

On June 2, 2012, the investor group announced an agreement to acquire 100% of Q9 Networks for C$1.1 billion, subject to regulatory approval and customary closing conditions. The amount was the reported purchase price for Q9, not Bell’s individual contribution.

The group comprised BCE Inc. (Bell), Ontario Teachers’ Pension Plan, Providence Equity Partners, and Madison Dearborn Partners. The transaction was completed in October 2012.

Who contributed equity, and what changed by closing?

The announcements reported different equity contributions at the proposal and completion stages. The sources reviewed do not explain the difference.

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Announcement Investment partners Bell Other financing detail
June 2, 2012 proposed deal C$420 million from Ontario Teachers’ Pension Plan, Providence Equity Partners, and Madison Dearborn Partners C$180 million The announcement said committed Q9 debt financing would fund part of the acquisition.
October 17, 2012 completion C$430 million from the three investment partners C$185 million The completion release reported these equity figures; it did not reconcile them with the June proposal.

These figures describe reported equity contributions, not separate purchase prices. The C$1.1 billion purchase price should not be read as money Bell paid by itself.

What Q9 did at the time

At the October 2012 closing, Q9 was described as a provider of hosting, co-location, and cloud-computing services. The completion announcement said it operated 12 data centres in British Columbia, Alberta, and Ontario. Those are descriptions of Q9 at the time of the deal, not claims about its present-day footprint or operations.

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The parties said Q9 would remain a stand-alone entity under its existing executives after the acquisition.

Why Bell wanted Q9

Bell presented the acquisition as a way to expand its hosting and cloud-based business by combining Q9’s data-centre services with Bell’s broadband network. Tom Little, then president of Bell Business Markets, called Q9 an “ideal partner” for that strategy in Bell’s June 2012 announcement. That was Bell’s promotional rationale; the transaction announcements do not establish whether the expected benefits were later achieved or quantify their results.

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How the 2012 purchase differs from the 2016 transaction

The 2012 acquisition was made by a four-party investor group. It should not be confused with BCE’s later acquisition of the Q9 equity it did not already own, which a BCE filing dates to October 3, 2016. The filing establishes that later ownership step; it does not make Bell the sole buyer in 2012.

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