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The biggest corporate takeover in Canadian history – the purchase of BCE Inc. by a group led by the plan
Toronto (23 June 2008) - Ontario Teachers' Pension Plan is "pleased" with the Supreme Court of Canada's ruling to allow the biggest corporate takeover in Canadian history – the purchase of BCE Inc. by a group led by the plan. Last month the buyout plan hit a roadblock when the Quebec Court of Appeal overturned a lower court's decision to allow the $52 billion deal to go ahead, ruling that BCE unfairly overlooked the interest of bondholders, who were hurt by the plan.
The ruling came late Friday afternoon although the Supreme Court justices did not release their reasons for ruling.
The issue before the Supreme Court was whether BCE’s board, in approving a $42.75 per share takeover bid by the Ontario Teachers’ Pension Plan and its U.S. private equity partners, failed to consider the impact of the debt-laden deal on BCE’s bondholders. The bondholders had complained that a leveraged buyout made their investments less valuable by loading up the company’s balance sheet with debt.
While the bondholders initially lost their case in a lower court, they later received a positive ruling from the Quebec Court of Appeal. In a unanimous decision, the appeal court said BCE’s board failed to consider other alternatives that might have been more favourable to the bondholders.
In addition to BCE and its investors, much of corporate Canada had been watching the case because the Supreme Court’s decision had the potential to affect the way future deals in this country are structured.