Did the feds just hand Teachers a MAC on BCE?
BCE Takeover part 24
First is was a soaring currency (see prior post “BCE Takeover part 23“, November 7-07). Then came a delay in the CRTC’s hearing timeline.
The latest strike against BCE’s putative owners came in the form of the federal government’s decision to make it easier for competitors to eat away at the great profit margins currently enjoyed by such providers as BCE, Rogers Wireless and Telus.
“Right now, everybody’s puking out on the news,” John Henderson, an analyst at Scotia Capital Inc. in Toronto, (in an interview with Bloomberg).
You have to assume Mr. Henderson was also thinking about OTPPB, Providence, Madison Dearborn Partners and Merrill Lynch when he coined that viseral phrase.
Rogers B shares dropped over 8% on the news. BCE was down barely 1%. Hmmmm. Is it that BCE is less exposed to wireless (yes), or perhaps folks see the $42.75 takeover price as a safety net.
Things have not gone smoothly on this deal. There was the credit crunch. Then the dollar soared, making the deal far more expensive, at least temporarily, for the U.S. partners than they’d counted on. On the heels of that pain, Rogers began to put pressure on Bell by cutting the cost of their wireless services (see post “An Alternative Investment Strategy“, November 26-07). And now the government is giving consumers an early Christmas present.
How much more bad news do the private equity backers of Canada’s largest LBO need to put up with before they are justified to start the “reprice” conversation with BCE’s board? Probably zero.
(disclosure – I own BCE and RCI.A)