Talk of a record buyout

Marketplace Staff Apr 11, 2007


MARK AUSTIN THOMAS: It could be the biggest leveraged buyout in history. The Ontario Teachers Pension Plan reportedly has its eye on Bell Canada and would pay $45 billion for the company. The teacher’s plan is the largest pension fund in Canada. Mike Hornbrook is an economic reporter for the CBC. I asked him how investors are responding to this possible buyout.

MIKE HORNBROOK: Well the investors are in the same position as everybody else, they’ve watched the stock go nowhere for the last three years and I think the time for Mr. Sabia and his leadership team has passed. So I think increasingly as the volume goes up on this potential deal, we’re going to see more of them coming on side.

THOMAS: How big is Bell Canada and what kinds of services does it provide?

HORNBROOK: Bell Canada is part of BCE. BCE is like a holding company. Bell Canada has long been established as the major telephone company in Canada but it was broken up years ago and we now have three major telephone companies. But Bell is into other things, and this is part of where many people think that BCE has lost its way. It owns a national newspaper, The Globe and Mail. It owns a television network. They also haven’t been, in some people’s view, investing sufficiently in redeveloping their business or reinvesting in their business.

THOMAS: Is it unusual for a pension fund to be involved in a leveraged buyout?

HORNBROOK: Well the Ontario Teachers Pension fund has a long reputation for investing in all kinds of businesses. It’s heavily invested in real estate in Canada. They have outperformed the market and so they’ve developed quite a reputation as being good spotters of value.

THOMAS: Thanks so much Mike.

HORNBROOK: My pleasure.

THOMAS: Mike Hornbrook is an economic reporter for the CBC.

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