bloggingbuyouts

BCE, Inc. (NYSE: BCE) is one of the large multi-billion dollar pending mergers that is on hold and is caught in the middle of a fight. Its merger has been on the books for nearly a year but its ultimate fate is not yet know. Because of all the speculation in this and with a legal fight currently underway, this one is uncertain.

We have seen leveraged trading in the stock options activity today that threw up a big giant red flag. More than 20,000 options contracts traded today that looks like a straddle play in the June options.

You can read the full story at Volume Spike (VSinvestor.com) to see in-depth options analysis, where we think this stock has to go, and more detailed data on the BCE, Inc. legal fight.

BCE Inc. (NYSE: BCE) is recently down 80 cents to $35.26.

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 Partners and Madison Dearborn Partners for an announced deal price of $42.75 per share. The Federal Communications Commissions cleared the deal on Dec. 20.

BMO Capital Markets says, "we reiterate our view that BCE stock could trade down to $27 should the deal break and trade in the $30 range on a seasoned basis." BCE May option implied volatility of 48 is above its 26-week average of 31 according to Track Data, suggesting larger movement.

M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Someone had to put together a list of LBOs that may fall apart because the stock markets are down. Leave it to the editors of The Wall Street Journal.

Making the hit list are Clear Channel (NYSE: CCU), Alliance Data (NYSE: ADS) and BCE (NYSE: BCE).

The newspaper is stating the obvious. The market already knows the deals are unlikely to close. BCE shares trade at $34, down from at 52-week high of $44.59.

The by-products of these problems are two-fold. The first is that LBO firms have obligations to close some of these deals. That means that break-up fees or lawsuits may be on the way. Boards at these companies may have little choice if their shareholders are billions of dollars underwater.

The other factor is that trust in LBO firms will probably fall to all-time lows with public companies. Whatever happened to the "our word is out bond" stuff?

Douglas A. McIntyre is an editor at 247wallst.com.

It's been a long process, but there's finally a deal. BCE (NYSE: BCE), which is the largest telecom company in Canada, has agreed to a $48.82 billion deal. The buyers include the Ontario Teachers Pension Plan, Providence Equity Partners, and Madison Dearborn Partners.

And, yes, it's the biggest buyout in Canada's history. It's even bigger than the TXU (NYSE: TXU) deal.

The transaction involved several other potential suitors, such as KKR and Cerberus Capital.

Because of increased competition and slower growth, BCE was ripe for a buyout. It also helps that the company has juicy cash flows.

So, by being a private company, BCE will have more leeway in making some key operational changes (such as layoffs and spin-offs).

The biggest winners are BCE's shareholders. After all, since late March, the shares have surged about 40%.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

BCE, the largest telecom company in Canada, has been the target of lots of buyout rumors lately. According to a piece in ReportOnBusiness.com, it looks like Cerberus wants to make a play for the company as well.

Yes, Cerberus has a lot on its plate right now. After all, it's in the process of buying out Chrysler from DaimlerChrysler (NYSE: DCX).

As for BCE, it's the kind of company private equity firms like. There's lots of cash flow, a valuable brand and barriers to entry.

One issue is that Cerberus will need to find some financial partners to meet shareholder rules for foreign ownerships. The talk is that they include Shaw Communications and CanWest Global Communications.

Another issue: There could be a bidding war, and that's something private equity firms try to avoid. Keep in mind that Cerberus is known for being pretty tough when it comes to pricing deals.

Some other possible bidders include the Canada Pension Plan Investment Board and KKR.

If the deal gets done, it'll be a doozy. The price tag could exceed $28 billion.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

BCE Inc. (NYSE: BCE) rose another nearly 4.5% today after The Globe and Mail reported a possible bidding war for BCE. The consortium of Canadian pension funds, led by Kohlberg Kravis Roberts & Co., might soon have two other groups considering the same deal.

To remind you, first there were rumors BCE is in talks with buyout firms. Then came a denial, followed closely by an acknowledgment: BCE is indeed considering taking the company private. Here are the reported players:

• KKR is considering taking control of one-third of the company with partners Canada Pension Plan Investment Board and two other pension funds, thus fulfilling the required majority Canadian ownership.
  
• Ontario Teachers Pension Plan is apparently assembling its own consortium and preparing to formally enter the bid process early next week. The group is said to be financed by Citigroup Inc. (NYSE: C) among others.
• And just to make shareholders happier, it is reported that two more U.S. private equity firms, giant Blackstone Group LP and Cerberus Capital Management LP, might form a third group. How this group would abide by the majority Canadian ownership law is still unclear, although Caisse de dépôt et placement du Québec might be shifting allegiances.
• Last time I also mentioned a possible merger between Bell (BCE) and smaller rival Telus Corp. (NYSE: TU). This might be more difficult from a regulatory point of view.
  

So far it seems that the groups are aligning themselves and preparing financing as "BCE has not prepared the data rooms that bidders need before deciding what they are prepared to pay."

After BCE closed up some 6% and Telus up over 3% during my last post, I was going to ask if you think hubby should sell his shares in both these companies. He wanted to sell all, I talked him down to selling half, but then he never got around to it. Lucky, or he would have missed today's 4.5% and 2.3% run for BCE and TU respectively.

Thank you Don for the FT link this morning.

The three Canadian telecommunication companies, BCE Inc. (NYSE: BCE), Telus Corp. (NYSE: TU) and Rogers Communications Inc. (NYSE: RG), are leading gains of telecommunication stocks following confirmed buyout talks.

Bell Canada, owned by BCE and the largest telephone company in Canada, has been rumored for the past month to have been talking to KKR and to Ontario Teachers about a possible offer to be taken private. Including today's gain, BCE has a market value of about C$30.8 billion ($27.3 billion), which would put the original rumored price of C$30 billion below its current market cap. Some mentioned C$40 per share as the magic number for a deal.

Of course, back when the rumors first started, BCE issued a denial, saying it had no plans to go private and wasn't in talks with buyout firms. Today is a different story. Today, the company issued a press release saying that it is reviewing its strategic alternatives and has entered into discussions with a group of leading Canadian pension funds to explore the possibility of taking the company private. Since the company needs to maintain a Canadian majority, Kohlberg Kravis Roberts & Co. will be a minority partner.

However, some analysts believe that a merger between BCE and smaller rival Telus is more likely to occur. According to Bloomberg, "That deal would value BCE at about C$42 a share, compared with the C$40 the company may get in a transaction with buyout firms." Even if regulators wouldn't allow such a merger, the prospects for Telus following such a deal are good.

Reuters expands on the Canadian pension funds involved here.

BCE shares are up over 6.6%, Telus shares are gaining nearly 3.5% and RG shares are rising 3.4%.