The $3.4B deal, which includes debt, is one of the largest media mergers Canada has ever seen — and will significantly strengthen BCE’s clout in Quebec. With Astral, Canada’s top telecom company will add to its collection of pay TV channels (including The Movie Network and HBO Canada). Astral’s also the largest radio station owner, with 83 in 50 markets. And it’s the No. 3 billboard company. Astral’s shares, which trade in Toronto are up 34% at mid-day. Here are the terms:

MONTRÉAL, March 16, 2012 – BCE Inc. (Bell) today announced that it has signed a definitive agreement to acquire all of the issued and outstanding shares of Montréal-based Astral Media Inc. (Astral) and its leading specialty and pay television channels, radio stations, digital media properties and out-of-home advertising platforms in Québec and across the rest of Canada. Greatly strengthening Bell’s competitive position in the important Québec media marketplace, this transaction directly supports Bell’s strategy of investment and innovation in broadband networks and content.

Bell will acquire all Class A Non-Voting Shares of Astral for $50 per share, representing a premium of 39% based on Astral’s volume-weighted average closing share price on the TSX for the last five trading days, for a total consideration of approximately $2.8 billion. Bell will also acquire all Class B Subordinate Voting Shares for $54.83 per share, for a total consideration of approximately $151 million, and all Special Shares for a total consideration of $50 million.

The transaction is valued at approximately $3.38 billion, including net debt of $380 million, and will be funded with a combination of cash (approximately 75% of the equity purchase price) and BCE common equity (approximately 25% or $750 million), with Bell retaining the right to replace shares with cash, in whole or in part, at closing. The enterprise value represents an approximate multiple of 10x estimated 2012 EBITDA (earnings before interest, tax, depreciation and amortization), consistent with similar recent media industry transactions including Bell’s acquisition of CTV in 2011. The acquisition will be immediately earnings and free cash flow per share accretive, supporting both Bell’s heavy capital investment in broadband network development, especially in Québec, and the company’s dividend growth objectives.

“Bringing together two respected and longstanding Montréal brands, Bell’s acquisition of Astral firmly establishes our company as Québec’s media leader. Bell is gaining a well-seasoned national Astral management team, dramatically expanding our French-language content, and more than levelling the playing field with our largest broadcast media competitor in Québec. We greatly look forward to welcoming Astral’s renowned leader Ian Greenberg to our Board of Directors,” said George Cope, President and CEO of BCE Inc. and Bell Canada. “Astral’s strong financial position enables Bell to further accelerate our significant investment in broadband innovation across Québec, such as our launch this month of ultra high speed Fibe service directly to homes and businesses across Québec City and our rollout of next-generation mobile LTE. With our advanced networks and next-generation Mobile TV and Fibe TV services, Bell looks forward to delivering Astral’s unbeatable content to customers in new and innovative ways.”

“This transaction with Bell represents an exciting moment in the history of Astral, and an excellent opportunity for our company, our shareholders and our employees. We have come to know Bell very well as a long-time commercial partner, and the fit between our two companies is a natural,” said Ian Greenberg, President and CEO of Astra Media. “On behalf of the Greenberg family and Astral’s Board of Directors, I would like to thank all of our employees across the different regions of Canada. Without their commitment and hard work, we could not have achieved this level of success.”

The Board of Directors of Astral, acting on the unanimous recommendation of the Special Committee comprised solely of independent directors, has unanimously approved the transaction and recommends that Astral shareholders approve it. All holders of Special Shares and the largest minority holder of Class B Subordinate Voting Shares, collectively representing a majority of the voting shares.