U.S. equity firm looking to take BCE private as Canada slips in IT readiness
Here is a story that should make everyone take notice about the strategies of the Conservative government in relaxing foreign ownership rules for telecom firms. This is particularly disturbing given the second story that shows that Canada still has a lot of work to do to support adequate and appropriate broadband infrastructure across the country.
BCE shares surge on report of takeover
March 29, 2007 - CBC News
Shares of communications conglomerate BCE Inc., the parent firm of Bell Canada, opened with a gain of 11 per cent on the TSX Thursday after reports that U.S. private equity firm Kohlberg Kravis Roberts is weighing a bid to take the company private.
The stock of BCE opened at $33.50, up $3.37 from the previous close.
Based on Wednesday's closing price of $30.13 a share, BCE's total market capitalization is about $24.33 billion. Factoring in a takeover premium of 15 to 20 per cent, a takeover bid from KKR could be worth as much as $30 billion.
The Globe and Mail reported Thursday that KKR has had at least two meetings with top officials at BCE, including CEO Michael Sabia.
Neither BCE nor KKR has offered comment on the takeover speculation.
A bid from New York-based KKR would face numerous regulatory hurdles, including the foreign ownership rules that prevent non-Canadians from owning more than 46 per cent of the voting stake of a telecom firm.
The Globe and Mail reported that KKR is looking for Canadian partners, such as the Ontario Teachers' Pension Plan, which is already BCE's largest shareholder, with a five per cent stake.
If the KKR offer does proceed, it could be the biggest acquisition in Canadian corporate history and one of the biggest leveraged buyouts in the world. Leveraged buyouts rely heavily on debt to finance share purchases.
KKR, Teachers' and BCE already have a business history. In 2002, KKR and Teachers' teamed up to buy BCE's Bell Canada directories business for $3 billion. The Yellow Pages directory business was spun off in 2004 as a publicly traded income trust.
Over the years, KKR also invested in other Canadian companies, including Shoppers Drug Mart in 2000 and Masonite International in 2005.
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Canada tumbles in global tech study
March 28, 2007 - CBC News
Some European countries and Singapore outrank Canada and the United States in their ability to best exploit information and communication technology, according to a new survey.
The World Economic Forum's "networked readiness index" measures the range of factors that affect a country's ability to harness information technologies for economic competitiveness and development. Canada slipped from sixth place in 2004-2005 to 11th place in the 2005-2006 study, which was released Wednesday.
The United States, which topped the previous rankings, slipped to seventh, according to the World Economic Forum. It had the same score as the Netherlands, but the forum ranked Holland one spot ahead of the U.S.
Networked Readiness Score by country
Denmark 5.71
Sweden 5.66
Singapore 5.60
Finland 5.59
Switzerland 5.58
Netherlands 5.54
U.S. 5.54
Iceland 5.50
U.K. 5.45
Norway 5.42
Canada 5.35
The initial release of material from the report did not provide details of the reasons for Canada's tumble in the rankings. For the U.S., it cited the low rate of mobile telephone usage, a lack of government leadership in information technology and the low quality of math and science education.
But Thierry Geiger, one of the forum's economists responsible for the 361-page report, said the U.S. market environment remains the best in the world in terms of how easy it is to set up a business, get loans and have access to market capital.
Nordic countries — traditionally strong in all surveys conducted by the Geneva-based forum — dominated the top of the rankings. Denmark edged Sweden for the top spot, while Finland was fourth.
Singapore was the top Asian nation in third.
The report covered 122 countries, with Chad, Burundi, Angola, Ethiopia and Bangladesh at the bottom.