Hong Kong tycoon eyes BCE stake
A private investment group controlled by Hong Kong tycoon Richard Li has confirmed its interest in joining a bidding group for Canadian telecommunications giant BCE Inc.
A private investment group controlled by Hong Kong tycoon Richard Li has confirmed its interest in joining a bidding group for Canadian telecommunications giant BCE Inc.
Li's Pacific Century Group said in a statement yesterday that it is in discussions with a consortium led by New York's Cerberus Capital Management LP about a potential takeover of the Bell Canada parent.
However, Pacific Century cautioned talks are still at an "early stage" and that its level of participation in any deal "is likely to be a minority stake."
Li, who has Canadian citizenship and is the son of Hong Kong billionaire Li Ka-shing, is also the chair of Hong Kong-based telecommunications firm PCCW Ltd., which declined to participate in the investment, according to the statement.
Montreal-based BCE said in late April that it was exploring its strategic options and was in buyout talks with a group of Canadian pension funds and U.S. buyout specialists Kohlberg Kravis Roberts & Co. The Canadian investors are needed to satisfy foreign ownership restrictions in any privatization of BCE.
Earlier this month, Cerberus emerged as another potential bidder after enlisting the help of Hospitals of Ontario Pension Plan. Media giant CanWest Global Communications Corp. was also rumoured to be a potential partner.
A third potential bid group could be led by the Ontario Teachers' Pension Plan, which is BCE's biggest shareholder and is said to have teamed up with Providence Equity Partners Inc., a U.S. firm that specializes in telecom companies.
Shares of BCE, which has a market value of about $30 billion, have languished until recently as Bell Canada continues to lose phone customers to cable companies and lags behind rivals when it comes to the wireless market.
Michael Sabia, the chief executive of BCE, has been trying to placate shareholders for several years through cost cutting and the sale of non-core assets. Since taking the helm in 2002, Sabia has cut nearly 9,000 jobs and sold parts of its stakes in CGI Group Inc., the country's biggest computer-services firm, and Bell Globemedia, now know as CTVglobemedia.
Some analysts believe BCE's fortunes could be turned around if the firm were taken private and subjected to a drastic overhaul.
Shares of BCE closed down 14 cents yesterday at $39.74 on the Toronto Stock Exchange.
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