BCE Shares Slump as Buyout Fears Reignite

TORONTO (Reuters) – Shares of BCE Inc (BCE.TO) are in a renewed fall as the crisis roiling the financial markets is again worrying investors concerned that funding for the company’s C$34.8-billion ($32.5 billion) buyout may fall apart.

Having stayed stable in recent months, the shares have given up about 9 percent since the beginning of this week. They were trading at C$36.03, down C$1.82, at midday on Tuesday on the Toronto Stock Exchange.

“The stock will likely continue trading at a noticeable discount … given the perceived funding risk,” National Bank Financial analyst Greg MacDonald wrote in a recent note to clients. “We remain convinced the deal will close and as such consider the weakness an opportunity for investors.”

BCE shareholders are no strangers to uncertainty and swings in the share price. BCE, parent of Bell Canada — the country’s biggest phone company — is being taken private by the Ontario Teachers’ Pension Plan and a group of U.S. private-equity firms.

The deal is being financed with billions of dollars of debt and is slated to close by Dec. 11. A Teachers’ spokeswoman said on Tuesday the buyers continue working towards completing the buyout by that date.

And Toronto-Dominion Bank (TD.TO), one of the banks funding the transaction, said on Tuesday it remains committed to the deal.

“Nothing has changed with regard to our support,” a spokeswoman for the bank said in an e-mail. “Our position has been consistent from the beginning — we’re committed to seeing this transaction through to completion.”

However, given the tight credit-market conditions, concerns have mounted that financing could be a problem.

While the buyers have repeatedly said the deal will be completed and that funding is secure, Montreal-based BCE’s shares have languished below the C$42.75-a-share buyout offer price as investors fret the deal could be delayed, repriced or scrapped altogether.

And in May, the shares slumped as low as C$31.80 amid legal challenges to the transaction that were ultimately overcome.

By Wojtek Dabrowski
(Reporting by Wojtek Dabrowski; editing by Peter Galloway)