BCE's going-private transaction terminated by investor group

By Lisa Kerner

Charlotte, N.C., Dec. 11 - BCE Inc. said the investor group led by Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, is terminating its June 2007 merger agreement with BCE.

The investor group, which includes affiliates of Providence Equity Partners Inc., Madison Dearborn Partners, LLC and Merrill Lynch Global Private Equity, had agreed to acquire all of the common shares of BCE not owned by Ontario Teachers for C$42.75 each and all of the company's preferred shares at between C$25.25 and C$25.87 each, it was previously reported.

According to BCE, the investor group, BCE Acquisition Inc., terminated the deal prior to the outside closing date, making its termination notice invalid.

BCE, a Montreal communications company, expected the going-private transaction to close on Thursday.

KPMG said it would not be able to deliver to BCE a positive solvency opinion, which was a condition of the transaction's closing. As a result, BCE said it will terminate the merger agreement and demand payment of the C$1.2 billion break-up fee from the investor group.

BCE Acquisition denies that it is obligated to pay the fee and said neither party has a right to the termination fee under the circumstances.

"It is most unfortunate that BCE is threatening litigation over the failure of a mutual closing condition that the company insisted be included in the original acquisition agreement," the investor group said in a statement.

BCE's board of directors said it will now address a reinstatement of its common share dividend beginning with its fourth-quarter dividend payable on Jan. 15. The board also plans to return capital to its shareholders through a normal-course issuer bid.

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