With Cerberus Group

BCE in talks with Cerberus group
Wed May 23, 2007 4:52 PM EDT

By Lynne Olver and Nicole Mordant

TORONTO/VANCOUVER (Reuters) - BCE Inc. , Canada's biggest telecoms company, said on Wednesday it is in talks with a consortium made up of U.S. private equity firm Cerberus Capital Management L.P. and a group of Canadian investors about taking BCE private.

The Cerberus consortium is one of three groups that may be in the running to buy BCE, which has a market capitalization of C$31.6 billion ($29.2 billion).

BCE's stock closed up 50 Canadian cents, or 1.3 percent, at C$39.26 on Wednesday. Its shares have soared by 22.5 percent since March 29, when rumors of a buyout first surfaced.

BCE did not name the Canadian investors in the Cerberus group, and a BCE spokesman would not provide further details.

A Cerberus spokesman said the firm had no comment.

By law, foreign entities cannot own a majority of a Canadian telecommunications company.

BCE, which owns Canada's biggest phone company, Bell Canada, has said it is reviewing all strategic alternatives, and expects to complete the process in the third quarter.

It reiterated on Wednesday that there is no certainty that a transaction will take place.

In April, BCE said it was in nonexclusive talks about a going-private transaction with a group made up of the Canada Pension Plan Investment Board, U.S. takeover firm Kohlberg Kravis Roberts & Co., and the Caisse de depot et placement du Quebec.

"Our consortium is still engaged in extensive due diligence with regard to a potential transaction. There is no change to our plan," Ian Dale, spokesman for the CPP Investment Board, told Reuters.

The Ontario Teachers' Pension Plan, BCE's biggest shareholder, has also expressed interest in mounting a bid with U.S. private equity firm Providence Equity Partners. Ontario Teachers' is still evaluating the opportunity to make a bid, and is not part of the Cerberus group, spokeswoman Deborah Allan said. She declined to say whether Ontario Teachers' was still recruiting investors for a consortium.

The Globe and Mail newspaper has reported that Calgary, Alberta-based Shaw Communications or Winnipeg, Manitoba-based CanWest Global Communications could be tapped as a Canadian partner for a U.S. bidder.

A spokeswoman for Canwest had no comment, and a Shaw representative was not available.

($1=$1.08 Canadian)