MONTREAL (CN) – BCE, Canada’s largest telecommunications company, demands a break-up fee of $1.2 billion from the Ontario Teachers’ Pension Plan Board and U.S. private equity firms, which failed to close a $52 billion leveraged buyout that would have been the largest in Canadian corporate history.
Montreal-based BCE is a public company with more than 600,000 shareholders. It provides residential and business telecommunications services through various subsidiaries, the most prominent being Bell Canada.
The Ontario Teachers’ Pension Plan Board and four U.S. private equity firms partnered to create the defendant holding company BCE Acquisition Inc. for the purpose of acquiring sole ownership and control of BCE.
BCE claims it had not sought out or initiated the transaction but that the deal was “thrust upon BCE once it was put in play by one of the defendants.”
An auction process implemented by BCE concluded with the defendants placing the “superior bid,” according to the Superior Court complaint.
The defendants were to pay a $1.2 billion break-up fee to BCE if the transaction did not go through by Dec. 11. The fee was to compensate BCE for the costs of closing the transaction, lost opportunities pending the transaction and other adverse effects.
BCE claims the defendants terminated the offer due to the increasing difficulty and burden of obtaining loans during the worldwide financial crisis.
It claims the defendants’ termination notice was, “premature and invalid,” because it occurred before midnight on Dec. 10.
Though the transaction failed, BCE says it “undertook diligent and, at times, extraordinary efforts to successfully obtain the requisite regulatory approvals for the transaction.” BCE’s demand for the now overdue payment has not been met by the defendants.
BCE is represented by Ogilvy Renault.