BCE Agrees to $48.8 Billion Buyout

BCE, the largest telecom in Canada and owner of the Bell Canada brand, said Saturday it has accepted a US$48.8 billion offer from a consortium led by the Ontario Teachers Pension Plan and including Providence Equity Partners and Madison Dearborn Partners LLC. The offer consists of C$34.8 billion in cash (C$42.75, or US$40.13, per share) and the assumption of C$16.9 billion (US$15.9 billion) in debt. The price represents a 6% premium to the shares' Friday close and a 40% premium to their average price during Q1, prior to the revelation that the company might be bought out. The pension plan will hold about 52% of the company; 32% will go to Providence; Madison Dearborn will hold just under 10%; and 7% will be held by unnamed Canadian shareholders. The consortium beat out Cerberus Capital Management LP and another Canadian pension plan backed by KKR. BCE's smaller rival Telus had considered bidding but withdrew after expressing dissatisfaction with the auction process. "This represents very, very substantial value for our shareholders," said BCE CEO Michael J. Sabia. "Bell will continue as a Canadian company held in the majority by a Canadian pension plan."

Sources: Press release, MarketWatch, Wall Street Journal, New York Times, TheStreet.com
Commentary: Telus Decides Against Takeover Bid for BCE; Three Suitors Remain • Why Isn't Telus Bidding for BCE? • BCE: Full Fledged Bidding War May Break Out
Stocks/ETFs to watch: BCE, Inc. (BCE). Competitors: Rogers Communications Inc. (RCI), Telus Corp. (TU). ETFs: iShares Dow Jones U.S. Telecom Sector Index ETF (IYZ), Telecom HOLDRS ETF (TTH), Vanguard Telecom Services ETF (VOX)

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