BCE Inc., Canada's largest telecommunications company, said Friday it has agreed on terms of a $35 billion sale to a group led by the Ontario Teachers' Pension Plan in the biggest leveraged buyout ever. The deal is expected to be completed by mid-December.
The announcement ends suspense that the banks funding the biggest buyout to date in Canada would try to back out of the deal or that the price would have to be lowered.
The acquisition price remains at 42.75 Canadian dollars ($42.08) per share in cash.
Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank are slated to provide billions in financing to complete the deal.
Including assumed debt, the transaction is worth $51 billion.
The acquisition by Teachers Private Capital, joined by U.S. investment firms Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch Global Private Equity, will close “on or before Dec. 11,” BCE said in a statement
Shares in BCE, also known as Bell Canada, moved in Toronto more than 13 percent higher to 39.81 Canadian dollars after the announcement.
Shares traded well below the purchase price for several months as investors worried the banks might back out or the price might be cut.
Shareholders overwhelmingly approved the buyout group's offer in September. Agreeing to final terms with the banks means shareholders won't have to vote again.
The deal was struck in June 2007, just before credit markets began to unravel in North America. Banks have been forced to write down billions of dollars on loans since last summer.
The last hurdle to the deal was getting final agreements with the banks on financing terms.
BCE, which has more than 54,000 employees, had annual revenue of 17.8 billion Canadian dollars (U.S. $17.5 billion) in 2007.