Cerberus enters battle for BCE

24 May 2007

Canada’s largest telecoms group Bell Canada Enterprises (BCE) has confirmed that it has entered talks with a third consortium, led by US private equity group Cerberus, which aims to launch a takeover bid for the company, the parent of Bell Canada and Bell Aliant. BCE has already entered negotiations with a team formed by the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec and US buyout specialist Kohlberg Kravis Roberts (KKR), and a rival consortium including the Ontario Teachers Pension Plan and US equity firm Providence Equity Partners. BCE said the Cerberus consortium included a group of Canadian investors whom it did not name. Members of the group have signed non-disclosure and standstill agreements with BCE on a non-exclusive basis, as the KKR consortium has. Earlier this month Cerberus agreed to buy car manufacturer Chrysler. While BCE did not disclose the names of the Canadian investors allied to Cerberus – which are essential to satisfy foreign ownership restrictions – a source familiar with the company said that cableco Shaw Communications, CanWest Global Communications and the Hospitals of Ontario Pension Plan have all been touted as potential partners. However, the source also said that it remains unclear how CanWest would raise funds to participate in the deal or how a stake in BCE would fit in with its overall corporate strategy. Shaw, on the other hand, is said to be interested in BCE’s satellite TV business in the event that Cerberus decides to break the company apart. Quebec-based BCE has a market value of some CAD31 billion (USD28.5 billion).

Canada, BCE (old)