bloggingbuyouts

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 Plan, Providence Equity 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.

RBC Capital says, "Financial results were in-line with expectations . . . there was nothing in the release that should worry investors in the context of the pending privatization." BCE June option implied volatility of 53 is above its 26-week average of 34 according to Track Data, suggesting larger movement.

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

The Clear Channel (NYSE: CCU) saga continues.

Clear Channel recently sued Providence Equity Partners to try to force it to complete the proposed $1.2 billion buyout of its television unit. But the two agreed last week to keep going with the deal, although with a price tag $100 million lower.

Now a new wrinkle: one of the banks financing the deal, Wachovia (NYSE: WB), is trying to back out of the deal. It has sued Providence, claiming that the new deal voids the previous agreement and frees Wachovia from its obligations in the deal. Wachovia committed to provide $450 million of financing for the original $1.2 billion deal.

It's not entirely clear why Wachovia is trying to back out. No doubt the reduced liquidity in the credit markets makes this a much less attractive deal. But as The New York Times speculates, Wachovia may be trying to escape from the much larger $25 billion buyout of Clear Channel itself. However, the tv unit deal is not related contractually to the larger deal, so escaping from one doesn't mean escaping from the other.

One thing is sure, though: buyouts are getting are harder to complete.

Clear Channel Communications (NYSE: CCU) has sued (subscription required) Providence Equity Partners in attempt to complete an agreed-upon deal to sell 56 TV stations to the firm $1.2 billion. Providence says that it is "surprised and disappointed that Clear Channel would suddenly bring this baseless lawsuit."

Interestingly, Providence is arguing that Clear Channel didn't have a right to sue them under the terms of the deal and that therefore it is under no obligation to pay the $46 million break-up fee if the deal falls apart.

Clear Channel also has a deal in place to be acquired in whole by Thomas H. Lee Partners and Bain Capital.

Nothing seems to be going well for Clear Channel as far as its efforts to get previously agreed to buyouts to close. The Lee-Bain deal has been dogged by rumors. At $32.35, Clear Channel shares trade at a substantial discount to the buyout price of $39.20.

Over at Seeking Alpha, Saul Sterman believes the buyout is a done deal. If that's the case, Clear Channel shares are a good deal here, but I wouldn't advise individual investors to speculate on something like this. Leave that game to more in-the-know arbitrageurs.

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.

BCE closed at $36.23. The Canadian Radio-television and Telecommunications Commission has scheduled a Feb. 25 hearing to examine the deal. The Federal Communications Commissions cleared the deal on Dec. 20. BCE over all option implied volatility of 44 is above its 26-week average of 22 according to Track Data, suggesting larger movement.

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

Traditionally, private equity firms have focused on mainstream businesses. But, we are seeing more and more deals in the tech sector. In fact, Google Inc. (NASDAQ: GOOG)'s buyout of DoubleClick was a sign that private equity can make a mint from tech.

According to a piece in The Wall Street Journal [a paid service], there's another important deal. That is, Providence Equity Partners has purchased a majority stake in NexTag for roughly $830 million.

Basically, NexTag is a comparison shopping site. And, yes, the space has been full of M&A deals over the past couple years -- such as Shopzilla, eBay Inc. (NASDAQ: EBAY)'s Shopping.com and so on.

Because NexTag is privately held, it's tough to gauge the revenues, but the rumor is that the figure is in the $200 million range. Thus, it looks like Providence is paying a hefty premium (at least by private equity standards).

My hunch is that this is a late-stage funding prior to an IPO or perhaps a sale to a major strategic player. But, this has historically been the role of VCs, not private equity firms. Yet with gazillions of dollars in the private equity space, we're probably going to see more unconventional deals.

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