BCE quote of the day

Aka BCE takeover part 9

At yesterday’s BCE (BCE:TSX) annual general meeting in Montreal, CEO Michael Sabia (one of the most intelligent and hard working people in any corner office in Canada) was asked the basic questions about when private equity firms contacted BCE, how did BCE respond, when did BCE push them away, etc.

Until it was all deftly leaked to the media and the auction could begin, that is.

According to a report in the Globe and Mail, Mr. Sabia had this answer:

“I can’t remember the exact sequencing.”

You should remember that sentence the next time you are asked an uncomfortable question. One that might be relevant to the Delaware Court should you get sued by shareholders. Or even in your personal life. Of course, none of us can remember the exact sequencing of anything.

When you start your car in the morning, do you open the car door, get in, look at the dashboard, put the key into the ignition, and turn the starter over? Or do you look out the windshield for a split second before then looking at the dashboard, inserting the key and turning the starter? Who knows the exact sequencing of anything we do? Memories are so fickle, after all.

This CEO-approved line can come in handy in so many ways: like when you wife asks if you stopped for a beer after work; “I can’t remember the exact sequencing, darling”. Or “you’re home late. Did you play an extra 9 holes of golf today, on top of the first 18?”

“Honey, I can’t remember the exact sequencing.” Golf involves a lot of different holes, after all, even if the scorecard goes from #s 1-18.

Mr. Sabia’s line doesn’t completely rival the answer given, under oath, to a Congressional Hearing by former Clinton White House Communications Director George Stephanopolous. The exchange was regarding a key meeting that was the focus of the Impeachment Proceedings against former U.S. President Bill Clinton. When asked what took place at this meeting, Mr. Stephanopolous replied: “while I was at the meeting in question, I have no specific recollection of what took place.” And you wouldn’t want to give legislators a general recollection, would you?!

Fortunately for BCE shareholders, the rough sequencing is easy to piece together, despite Mr. Sabia’s lack of a specific recollection:

1. Private equity firm KKR approaches BCE about a takeover at, maybe, 35% or 40% above the then BCE share price.
2. BCE management and board say “go away, we have a plan to get there ourselves.”
3. A Canadian pension fund (and large BCE shareholder) hears of this and gets frustrated, having watched Rogers’ (RCI.B:TSX) shares more than double while BCE’s stayed essentially flat. The pension fund sees to it that The Globe & Mail (which is partially owned by BCE) becomes aware of the KKR story.
4. Story of KKR interest in BCE runs in the newspaper.
5. Stock races from $28 to $34 initially, and then to $39, as the suitors finally come out of the woodwork.
6. The federal government stays intentionally mum, allowing the bid process to proceed to its ultimate conclusion.
7. Pension funds and private equity firms continue to buy BCE shares in the market at ~$39 to ensure that, as institutional investors, they own enough of the company to make a deal ultimately happen.
8. Mr. Sabia’s 441,000 shares and DSU’s (100k DSUs were granted in the last 12 months alone) are already up about $5 million in value, courtesy of the original media leak.

At least that’s my specific recollection of the sequence of events.

MRM
(disclosure – I own BCE shares)