Canada's Telus, BCE in merger talks
Vancouver-based Telus billed the nonexclusive talks with BCE as a made-in-Canada bid to ensure that U.S. private equity players like Kohlberg Kravis Roberts, Providence Equity Partners or Cerberus Capital Management do not secure control of the country's largest phone company during a pending auction.
"(A Telus-BCE merger) would be an all-Canadian solution for both immediate and long-term value creation, whilst ensuring a vibrant player continues in this increasingly competitive industry," Telus president and CEO Darren Entwistle said in a statement.
BCE has been pursued since April by consortiums mostly comprising Canadian and U.S. private equity players. These include privatization bids from the Caisse de depot et placement du Quebec, the Canada Pension Plan Investment Board, Canadian leverage buyout giant Onex Corp. and Kohlberg Kravis Roberts.
Other bidders include two consortiums led respectively by the Ontario Teachers' Pension Plan, BCE's largest shareholder, and New York-based Cerberus Capital Management.
Telus argued that allowing it to merge with BCE will create a domestic phone giant with a market value of about CAN$53 billion ($49.5 billion) would be "the most likely strategic alternative to preserve long-term Canadian control if foreign ownership restrictions are removed."
Ottawa is considering easing, or lifting altogether, foreign ownership restrictions on domestic phone and cable giants to enable them to secure more growth capital.
Formal bids for BCE are expected to be placed on the table by early next week.