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Telus Drops Out of Bidding for BCE Inc.


27/06/2007

Western Canada’s largest telecom provider, Telus Corp., has pulled out of the bidding for its eastern counterpart, Bell Canada Enterprises Inc., which is currently seeking buyout offers from public companies and private equity firms alike.

Telus chose to bow out of the bidding due to what it describes as delays and inadequacies in the sale process.

“You can’t buy a company for $40-billion when you are only given a tiny fraction of the due diligence you need to make in a bid. … These talks were totally delayed at every turn,” one person familiar with the BCE-Telus negotiations was quoted as saying.

BCE’s stock dropped 3% after Telus announced its decision, to close at C$39.49/share on the Toronto Stock Exchange. Before this, BCE had released a statement defending its much-criticized negotiation procedure.

“In a deal of unprecedented complexity and size in Canada, we have succeeded in creating a truly competitive process,” explained BCE spokesman, Bill Fox, in a planned company statement. “It is not surprising that some party seeking its own advantage wants to complain, because we have not tipped the process in any one direction. We have run the process in a manner that seeks to encourage maximum participation with a view to achieving the best result for BCE shareholders.”

As of now, the bidding is between three private equity consortiums, all of which confirmed interest in BCE in time for yesterday’s deadline. One of these groups is led by the Canada Pension Plan Investment Board, in partnership with New York buyout firm, Kohlberg Kravis Roberts & Co., while another has been spearheaded by BCE’s largest shareholder, the Ontario Teachers’ Pension Plan. A final buyout consortium is being led by U.S.-based Cerberus Capital Management, in partnership with the Hospitals of Ontario Pension Plan.

Market analysts warn, however, that Telus is not completely out of the running just yet. The company’s confidentiality agreement allows it to initiate a hostile takeover bid on BCE if and when the eastern telecom giant reaches a preliminary agreement with another buyer.



 

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