Tuesday, April 17, 2007

BCE confirms talks of possible sale

Last Updated: Tuesday, April 17, 2007 10:09 AM ET
CBC News

After weeks of takeover rumours, Bell Canada's parent company said it is "reviewing its strategic alternatives." That could include a possible sale of the company.

Leading the group of pension funds are the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec and Canada's Public Sector Pension Investment Board.

Also in the mix is Kohlberg Kravis Roberts and Co., a New York-based private equity firm.

There was no mention of the Ontario Teachers' Pension Plan, which has been frequently mentioned as a possible suitor. Teachers' is BCE's largest shareholder, with just over five per cent of the stock.

BCE said that it will ensure it remains Canadian to meet foreign ownership restrictions. Canadian law requires that the majority owners of telecom companies be Canadian.

The company added that "it will continue to explore all other opportunities" and said there's no assurance that any deal will result.

Taking the company private would mean an end to BCE trading on the Toronto and New York stock markets. It is one of the most widely held stocks in Canada.

Until takeover speculation ramped up in the past few weeks, BCE shares had languished on the stock markets, showing little growth over the previous five years. That was in stark contrast to the shares of rival telecom companies Telus and Rogers Communications.

That poor performance was one of the reasons BCE shareholders were pushing for some action to "enhance shareholder value" — market shorthand for boosting the stock price.

News of a possible deal powered BCE shares to a five-year high on the TSX Tuesday. The stock was at $38.35 in morning trading, up $2.09.

If BCE does do a deal, it would be one of the biggest in Canadian corporate history. Based on its closing price of $36.26 Monday, BCE was worth $29.3 billion. If reports that BCE would be looking for $40 a share are true, that would make a BCE deal worth more than $32 billion.