Bell Canada’s acquisition of 750 The Source consumer electronic stores across the country is expected to ratchet up the pressure against rivals to sell more cellphones, technology and services.
The Montreal-based phone company owned by BCE Inc., said late Monday it will acquire The Source by Circuit City for considerably less than the $335 million paid by Circuit City in 2004 for the retail chain.
BCE declined to offer specifics on the acquisition price because U.S.-based Circuit City has filed for bankruptcy protection and plans to liquidate its operations in the United States.
The announcement marks the first major deal for BCE since the collapse of its planned $52 billion cash and debt sale to private investors late last year, and Bell Canada moves to cut costs and become more competitive.
Bell said the acquisition will more than double its national retail network to 1,450 outlets. The stores will carry a range of consumer services, such as Bell Mobility and Solo Mobile cellphones as well as television, Internet and phone products by January 2010.
The acquisition “supports Bell’s strategic imperatives to accelerate wireless and leverage momentum in wireline services like Bell TV, Bell Internet and Bell Home Phone,” Bell president and CEO George Cope said in a release.
Bell said acquired stores, which have about 3,000 workers, will continue to operate under The Source name, and carry a similar line of electronics.
“There is no interest on our part of closing a large number of stores. We’re buying it to gain access to a large number of locations and we’re certainly not coming at it with the idea of closing a number of them,” said Wade Oosterman, president of Bell Mobility.
“It was all about gaining distribution access for us.”
The Source has been profitable for the last seven years, reporting $27 million in earnings before taxes depreciation and amortization, and revenues of $643 million in 2008, Bell said.
The stores, which sell everything from cellphones and batteries to TVs, parts and other consumer electronics, have been on the market since Circuit City and its Canadian subsidiary sought court protection from creditors late last year.
Bell’s acquisition of The Source is an early move by Cope, a former senior Telus executive, to grow Bell’s business since taking over the company last summer.
In recent months he has focused on cutting costs, which included layoffs, a streamlining of white collar staff and other belt tightening throughout its operations.
“They’re striking up more significant competition,” said Wendy Evans, head of retail consultancy Evans and Co. Consultants Inc.
“It’s a brilliant move for Bell to further that retail distribution channel.”
