Canadian pension plan wins telecom bid

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BCE Inc., Canada's largest telecommunications company, said Saturday it has reached an agreement to be bought by a group led by the Ontario Teachers Pension Plan for C$51.7 billion (US$48.5 billion), in the largest takeover in Canadian history.

The Ontario Teachers Pension Plan Board in cooperation with U.S.-based Providence Equity Partners and Madison Dearborn Partners, LLC won out over several other bidders in a cash deal that will take the company private, BCE said in a statement.

"It is gratifying to see that BCE's Board of Directors shares our vision for this initiative, and we are honored to lead the largest buyout transaction in Canadian corporate history," Jim Leech, senior vice-president of Teachers' Private Capital, the investment wing of the pension plan, said in the statement.

The pension plan was BCE's largest shareholder with a 6.8 percent stake. Leech noted that the plan has been a major BCE shareholder since the early 1990s.

The investor group will acquire all the common shares of BCE not already owned by Teachers for an offer price of C$42.75 (US$40.37) per common share. The stock traded at C$31.33 ($29.58) at the start of the year and closed at C$40.34 (US$38.09) on Friday.

The transaction is valued at C$51.7-billion (US$48.5 billion), including C$16.9-billion (US$15.9 billion) worth of debt, preferred equity and minority interests.

The deal will require approval from shareholders along with federal government regulators.

The Toronto-based Ontario Teachers Pension Plan — with assets of C$106 billion (US$99 billion) in 2006 — invests and administers the retirement funds for Ontario's 167,000 teachers and 104,000 retired teachers. Leech said BCE's headquarters will remain in Montreal.

BCE had other potential bidders, including New York-based Cerberus Capital Management LP with billionaire Hong Kong-based, Canadian citizen Richard Li's Pacific Century Group, and the Canada Pension Plan Investment Board with backing from American buyout firm Kohlberg Kravis Roberts & Co.

Telus — Canada's second-largest telecom company — pulled out of the bidding last Tuesday.

BCE, which has more than 54,000 employees, had annual revenue of $C17.7 billion (US$16.4 billion) in 2006. It has 18.2 million customer connections, including 5.8 million wireless subscribers, 8.64 million phone lines, 1.94 million internet subscribers and 1.82 million satellite television subscribers. Other BCE holdings include interests in CTVglobemedia, one of the biggest Canadian media companies.

"This proposed transaction concludes a comprehensive and disciplined review of the company's strategic alternatives launched April 17," Richard J. Currie, Chairman of the Board of BCE said in the statement. "It will deliver substantial value creation for our shareholders. In addition, a majority of the equity will be owned by Canadians."

BCE chief executive Michael Sabia resisted suggestions of a takeover in the past, in the belief that his slimming and focusing of BCE, including an end to its conglomerate structure and a planned return to the Bell Canada name, would end a long period of flat stock-market performance.