BCE Buyers Mulling Minority Stake: Report

The proposed buyout of Canada's BCE appears less likely as the private equity firms that agreed to the takeover consider whether to buy only a minority stake in the company, a report says.
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The proposed buyout of


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, the Canadian telecommunications giant, appeared less likely as the private equity firms that agreed to the takeover debated instead whether to buy a minority stake in the company, the

Financial Times


Providence Equity Partners and the Ontario Teachers Pension Plan, which had originally agreed to purchase a combined 84% equity stake in BCE, are proposing to buy a fraction of the company as an alternative to having the deal completely fall apart, the newspaper reports, citing people close to the matter.

Many people close to the deal, however, say the purpose of considering such alternatives is to satisfy legal requirements and show good faith rather than to reach agreement on a real transaction, according to the

Financial Times


Moreover, not all of the four private equity firms that had agreed to the original takeover -- which included Madison Dearborn Partners and Merrill Lynch Global Private Equity -- may be interested in taking a minority stake in the telephone company, the report says.


Financial Times

reports people close to the companies doubted whether any deal could be renegotiated before the takeover's scheduled closing date of Dec. 11, at which point


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Deutsche Bank

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Royal Bank of Scotland

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Toronto-Dominion Bank

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will be relieved of their obligations to fund the transaction.

The takeover of BCE -- valued anywhere from $27 billion to $35 billion -- was signed in June 2007 as the credit markets began to soften and would have been the largest buyout ever if it closed at that time. But the deal was dealt a setback last week when auditors KPMG said BCE could become insolvent if it were piled with the debt required for the deal as structured. A solvency opinion is required to complete the deal, the

Financial Times


This article was written by a staff member of TheStreet.com.