BCE Inc. (NYSE: BCE), Canada's largest telecommunications company, announced on June 30, 2007, that it agreed to be acquired by an investment arm of Ontario Teachers Pension, Providence Equity Partners and Madison Dearborn Partners for an announced deal price of $42.75 per share. The deal is expected to close in Q1 of 2008.
Yesterday, BCE stock closed at $37.41 per share. BMO Capital says, "we believe the deal will close as intended." BMOC also says, "the stock could trade down to the $27-30 range in the event the deal were canceled."
BCE over all option implied volatility of 36 is above its 26-week average of 20 according to Track Data, suggesting larger risk.
M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Reader Comments (Page 1 of 1)
1-16-2008 @ 6:58PM
investor said...
This deal still has to be cleared by the CRTC. See Catalyst intervention at canadiansolution.ca The Catalyst recapitalization was presented to the Board alongside the private equity bid from Teachers.....but never disclosed to BCE shareholders in the Bid Circular....failure to disclose an material alternative transaction is a case of "do not pass Go, do not collect $200
1-16-2008 @ 8:02PM
Tony said...
The deal was quite good and accepted by a vote by the majority of shareholders.
This is wolf crying trying to throw a monkey wrench to the deal but it will fail.
The Catalyst proposal is nothing in comparison with the Teachers' deal.
1-16-2008 @ 8:36PM
investor said...
The "monkey wrench" arises form the fact that the company failed in its disclosure obligations.
Let's examine whether: "The Catalyst proposal is nothing in comparison with the Teachers' deal."
Teachers': $42.75
Catalyst: $42.50 to $52.00
Teachers': Fully taxable as capital gains
Catalyst: 75% tax free rollover
Teachers: reinvestment risk
Catalyst:staples security raises dividend from $1.46 to $2.55
Teachers': forego all future upside including "regulatory" flip
Catalyst: preserves all upside including regulatory changes to foreign ownership rules which will bump value overnight
Teachers': reduces debt to junk bond status, bondholders suit
Catalyst: preserves investment grade credit
Teachers': must clear CRTC and Telecom Act provisions
Catalyst: no regulatory clearance req'd, no change of ownership
1-17-2008 @ 8:51AM
Tony said...
>>
Catalyst: $42.50 to $52.00
>>
Is hot air + $2.55 dividend!
How can Catalyst decides the Stapled Securities worth $42.50?
1-17-2008 @ 10:28PM
investor said...
BCE"s forecasted EBITDA growth is 3-5%. Their most recent quarter saw EBITDA grow at 4.5%. With this level of growth in EBITDA, income investors in Canada, in today's market would require a yield of 6%, for a combined total return of 9 to 11%.
A 6% current yield on a $2.55 distribution, translates into a $51.00 stcok price. Catalyst values their recapitalization at between $42.50 and $52.00. Rates have only gone down since the Catalyst deal was proposed in June 2007