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Canadian telecom giant OKs bid

An Ontario pension plan teams with U.S. equity firms in the deal.

July 02, 2007|From Reuters

BCE Inc., Canada's largest telecommunications group, accepted an offer Saturday worth 51.7 billion Canadian dollars (48.5 billion U.S. dollars), including debt, from a group including the Ontario Teachers' Pension Plan.

BCE said its board recommended that shareholders accept the offer of 42.75 Canadian dollars a share from the consortium, which includes the pension plan's investment arm, Teachers' Private Capital, as well as Providence Equity Partners Inc. and Madison Dearborn Partners.

The buyers will take BCE private, changing the ownership structure of a blue-chip corporation described as an investment for widows and orphans because of its generous dividends.

"This represents very, very substantial value for our shareholders," Chief Executive Michael Sabia said during a conference call announcing the deal.

The group including Teachers' Private Capital was one of several competing for BCE, which is known for its Bell Canada phone services and for media interests grouped in CTVglobemedia, part owner of the national Globe and Mail newspaper.

The Ontario pension plan was already BCE's largest single shareholder, with a stake of about 6%. BCE said Teachers' Private Capital would own 52% of the company if the deal went through, meeting Canadian rules that telecommunications firms must be majority-owned by Canadian firms.

Providence would hold 32%, Madison Dearborn 9% and other Canadian investors 7%, BCE said.

Telecommunications group Telus Corp., one of BCE's main Canadian rivals, had also expressed interest in the auction but pulled out last week, complaining about bidding rules.

BCE executives insisted that the bidding had been fair and transparent, although they admitted there had been unique issues in dealing with a direct competitor like Telus, including working out how to share confidential information.

Sabia said the teachers' offer would leave Canadian consumers with a more competitive landscape than would have been the case if BCE merged with Telus. But he acknowledged that Telus might yet come back with a sweeter bid.

"Our board has ... obligations to continue to be open to a superior proposal, should a superior proposal arise," he said.

Sabia said the teachers' offer was a 40% premium over the share price before BCE put itself up for sale, and he expected the deal to close in the first quarter of 2008.

The transaction must still be approved by regulators and by BCE shareholders.

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