Manitoba shareholders get a kick in the teeth

1 Apr 2004

Manitoba Telecom Services’ CAD1.53 billion (USD1.17 billion) acquisition of Allstream will not require shareholder approval, the Toronto Stock Exchange said in a statement yesterday. A group of Manitoba shareholders had petitioned the Toronto Exchange for the right to vote on the deal, concerned that the acquisition of Allstream contravenes promises by Manitoba to pursue the transformation of itself into an income trust; if Manitoba becomes a trust the majority of its earnings will be passed on to its shareholders. On 27 January a statement by Manitoba, agreeing to put forward a proposal to shareholders to convert the company into a trust, helped push the telco’s stock up 15% in two days. When it announced the Allstream deal less than two months later the share price fell 10% in a day. Manitoba says it needs to buy up Allstream – formerly AT&T Canada – to effectively compete against Canada’s dominant telcos BCE and TELUS Corp.