Telus and BCE confirm merger talks

BCE, parent of telcos Bell Canada and Bell Aliant, has confirmed that it has entered merger talks with its principal fixed line rival Telus. Quebec-based BCE said late yesterday that it is in discussions with western Canadian incumbent Telus to ‘explore the possibility of a business combination.’ The two companies – which together have a combined market capitalisation of more than CAD50 billion (USD46 billion) – have entered into a non-exclusive agreement, BCE added. A merger deal would likely raise anti-monopoly issues. Recent media reports quoting sources close to the company said Telus was unlikely to bid for a stake in BCE unless it has a clear signal from the government that it would not block a merger. Three groups interested in a takeover of BCE have come forward in recent weeks, led by the Canada Pension Plan Investment Board, Ontario Teachers Pension Plan Board (both with US private equity backing), and US private equity firm Cerberus Capital Management. BCE has reportedly asked the consortia bidders to submit their offers for the company before 1 July. While private equity bids have dominated takeover speculation so far, BCE CEO Michael Sabia said at the company’s recent annual meeting that a private equity takeover is not the only option available to the firm, leading to speculation about other possibilities such as a massive share buyback or a merger with Telus.