BCE Takeover part 4

Clock ticking on BCE Bid

At times the BCE (BCE:TSX) dance seems like it might just fizzle, but then more news is leaked regarding the behind-the-scenes machinations and the stock inches up another tiny bit, ensuring that the BCE board has even more pressure on it than the week before.

Today’s news is that the Ontario Teachers Pension Plan Board (Teachers) has rallied about a third of BCE’s shareholders together to support a $30+ billion going-private transaction. I find it interesting that we have yet to see the word “hostile” in connection with the BCE deal. Normally, when a buyout / LBO fund (or a strategic for that matter) is rumoured to be looking at acquiring a public company it is slapped with the “hostile bid” label. But I’ve yet to see it this time. John Labatt, Air Canada, Accellio, etc.; they all got the label. Why not here?

Is it that the media have correctly determined that this potential deal may be hostile to management, but it sure isn’t seen to be hostile by BCE’s shareholders?

The quote of the week surely has to be this:

“What Teachers is doing is disgusting,” said one BCE director. “These guys hold themselves out as paragons of governance, then they become activists who take their case to the press.”

I think the director in question is utterly wrong on this: there is nothing incompatible with advocating good governance and simultaneously lobbying for change at the companies you own. Teachers is just practicing what they preach.

If the change doesn’t come, firms such as Teachers have a job to do: maximize value for their members and their moribund 5% BCE stake (and unlike many shareholders, Teachers has a private equity shop that can do just that). The BCE board is also charged with maximizing value for the BCE shareholders. It just may be that the two groups disagree with the pace and strategy, but there’s no hypocrisy in their actions…assuming what we’ve read in the media is accurate.

And the holders of the 800 million shares outstanding have made $4 billion in paper gains as a result.

MRM
(disclosure – I own BCE shares)