BCE buyout balances on the brink

The pending buyout of Bell Canada Enterprises by the Ontario Teachers' Pension Plan and its U.S. private equity partners is coming down to the wire, with many observers still expecting the deal to collapse. Auditor KPMG is set to render its final solvency opinion tomorrow, the scheduled completion date for the buyout, after warning late last month that the deal's debt and market conditions were working against it. If the deal fails, it will trigger a court battle of a $1.2 billion break-up fee and examination of whether or not some parties tried to sway KPMG's opinion. Some published reports have suggested that the buyers may have wanted out of the deal, and on the other side, BCE actually hired a second auditor, PricewaterhouseCoopers, in an attempt to gain an endorsement for the deal and influence KPMG's final opinion on the matter.

Interestingly, the Toronto Globe and Mail points out that regardless of what happens, the OTPP, still BCE's largest shareholder at 6.3 percent ownership, managed to drive great change in the company's management and costs by bidding to acquire it. It still stands to see better long-term value of its shares even if the deal does fall apart.

For more:
- The Toronto Global and Mail summarizes the saga

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KPMG initially issued an unfavorable solvency opinion
The BCE acquisition bid was announced in July 2007
Acquisition alternatives have failed to develop