BCE being taken private?

The rumor mill is going wild on the news that BCE may be taken private by Kohlberg, Kravis Roberts (KKR). The US private equity firm has been involved in many of the most spectacular deals over the past decade or so. The firm has access to the capital required to complete this $24 billion deal.

The main hurdle will be the foreign ownership limits in place on Canadian telecom and media companies. KKR would need to find a wiling Canadian partner or partners to complete the deal. The Ontario Teacher Pension Plan already has an ownership position in BCE and would be a likely partner along with other pension plans.

If this deal goes through it seems that this will potentially be one of the unintended consequences of the Governments decision to stop the creation of income trusts. If BCE had been allowed to convert to a trust structure I doubt that any of the unit holders would be willing to tender to an offer taking the company private and give up the high income distributions. The common shareholders will be much more receptive to an offer for this lackluster performer. BCE shares have basically gone sideways for nearly 5 years as management tries to refocus the company back to its core businesses.

If you currently own BCE shares be prepared to accept an offer from a group led by KKR and say good bye to another Canadian icon stock as global investors continue to see value in the Canadian market.

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