Bell Canada has finalised a deal to sell itself to a consortium of investors for about $50 billion, ending the turbulent negotiations of the largest buyout in history.
The deal still calls for the buyers to pay $42.75 a share, which means there is no need for a fresh shareholder vote. However, Bell Canada is freezing any dividend payments between now and the takeover’s expected close in December, which amounts to about a $2 a share price cut.
The savings from dividend payments and free cash flow generated in the interim means the buyers will be paying about $1.5 billion less for Bell Canada. The lending banks, who had threatened to quash the deal, will benefit from the savings.
The four-bank consortium — Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank — had sought to revise their lending commitments.
It is a face-saving solution to a battle that had looked set to have only one winner: the lawyers who had already filed lawsuits on behalf of each party in the dispute.
Shares in Bell Canada’s parent, BCE, rose 12.3 percent to 39.50 Canadian dollars ($38.86) per share on the Toronto Stock Exchange.
The private equity buyers include Ontario Teachers’ Pension Plan, Providence Equity Partners, Madison Dearborn Partners, and Merrill Lynch Global Private Equity. The consortium was given financial advice by Citi, Deutsche Bank, Toronto-Dominion, which is a co-investor in the deal, and Morgan Stanley, and legal advice by Weil, Gotshal & Manges and Goodmans.
Bell Canada was given financial advice by Goldman Sachs, BMO Capital Markets, Royal Bank of Canada, Canadian Imperial Bank of Commerce and Greenhill & Company.