BCE may take company private

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TORONTO -- Canadian phone giant BCE Inc. on Tuesday said it is talking with three domestic pension funds backed by Kohlberg Kravis Roberts and Co. (KKR) about "taking the publicly traded company private."

Montreal-based BCE, Canada's largest phone company and recently the subject of takeover speculation, said it is conducting non-exclusive talks with the Canada Pension Plan Investment Board, the Caisse de depot et placement du Quebec and Canada's Public Sector Pension Investment Board, with KKR joining the Canadian consortium as a minority partner.

Henry Kravis, a KKR co-founding member, said in a statement that he looks forward "to working closely together in this transaction."

"Our experience in large, complex transactions of comparable size will be of significant value to this process," he added.

In addition to its phone service, BCE owns and operates domestic satellite TV service Bell ExpressVu LLP and has a minority stake in the CTV TV network.

Media reports in late March reported that Canadian buyout specialist the Ontario Teachers' Pension Plan, BCE's largest shareholder, was in discussions with Quebec pension fund giant Caisse de depot et placement, and the Canada Pension Plan Investment Board in regards to launching a bid for the phone giant (HR 3/31).

Other media reports pointed to Teachers, which has a 5.3% stake in BCE, moving on the company in partnership with U.S.-based Providence Equity Partners Inc.

But Tuesday's confirmation of talks that center on taking BCE private left out any mention of Teachers or Providence Equity Partners, prompting speculation that both parties have bowed out of any bid for the phone company.

Any takeover deal for BCE that includes a U.S. equity fund partner would have to be structured in such a way that a Canadian partner remains in control of the culturally sensitive phone company.

Current Canadian law bars foreigners from owning more than 20% of Bell Canada, BCE's phone division, ore more than 33% of its parent.

KKR and its Canadian partners said there is no guarantee that a go-private bid for BCE will emerge from the current talks. But that didn't stop shares in BCE rising 7% to $34.23, up $2.16, during morning trading on the New York Stock Exchange.
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