Bell Canada Enterprises, BCE
BCE is Canada’s largest communications company. Through its 28 million customer connections, BCE provides the most comprehensive and innovative suite of communication services to residential and business customers in Canada. There is a huge public interest in BCE’s future for a number of reasons. It’s one of the oldest companies in Canada and the stock is amongst one of the most widely held in Canada.
So, what exactly is “Ma Bell” cooking up for us?
There are a variety of different scenarios on the table for BCE’s future: The Canadian Pension Funds and KKR consortium, the Ontario Teachers Pension Plan and a Private Equity Group consortium or a BCE and Telus merger.
One scenario BCE has confirmed it has been discussing is the Canadian Pension Funds and KKR consortium.
BCE confirms it is talking to a deep-pocketed group led by three Canadian Pension Fund giants – the Canada Pension Plan Investment Board, the Caisse de depot et placement, and the Public Sector Pension Investment Board. The New York based private equity group, Kohlberg Kravis Roberts & Co. (KKR) is a minority partner. KKR’s website spells out the company’s mission statement, it “acquires industry-leading companies and works with management to grow and improve them and thereby create shareholder value.” In 2002, BCE sold its Bell Canada directories business to KKR in partnership with the Ontario Teachers’ Pension Plan. They later spun off the Yellow Pages directories into the Yellow Pages Income Fund and sold it for a profit.
What should I do with my BCE Shares?
The value of the BCE shares have risen in value by roughly $8 in a little over a month. This is a significant increase in price for a stock that, prior to these talks, has only managed to appreciate roughly $4 in the last year. So, what do you do? While only time will tell; here’s my recommendation. If you consider yourself a speculative investor (can handle more risk), continue to hold your BCE shares in hopes a merger or a takeover happens. If you are a more conservative investor, consider taking a half position in your shares. In other words, sell half of your shares and takes some profit off the table.
In the event of a takeover or merger the value of the stock may rise to a $42 level. In the event nothing happens, we may see the stock drop back down to the $30 level where it sat a year ago based on a loss of consumer confidence.
What if I have Share Certificates at Home?
It has been common for investors to possess the physical share certificates for BCE and other companies listed on the Stock Exchanges. ScotiaMcLeod offers you the ability to deposit these share certificates free of charge into an account and electronically registers these shares in your name. It is possible that in the event of a private takeover of BCE there will be a mandatory retraction of these shares and at which point you would have to tender them anyways. With your shares on deposit at ScotiaMcLeod we will tender these shares on your behalf free of charge. Another benefit of depositing your share certificates would be in the event of a drastic market change or stock price move. We would then have the ability to react to this situation in real time.
The same can be done for your Canada Savings Bonds.
If you have any questions regarding the electronic registration of your shares or Canada Savings Bonds please feel free to contact me.