BCE deal finalized. Deal to close December 11th

Telecom giant BCE Inc. has cleared the financing hurdle widely seen as the last major step in completing its $52 billion acquisition by the Ontario Teachers' Pension Plan in the largest corporate takeover in Canadian history.

The Montreal company, parent of Bell Canada, said Friday the acquisition price remains at $42.75 per share in cash, calming earlier speculation that the agreement would be renegotiated at a lower price over concerns by the banks financing the transaction.

Citigroup, Deutsche Bank, Royal Bank of Scotland and Toronto-Dominion Bank have committed to provide billions in financing to complete the deal. Including assumed debt of about $17 billion, the transaction is worth C$52 billion, making it the largest leveraged buyout in history.

BCE, one of Canada's best-known and widely held companies, said both the purchaser and lenders delivered the required final documents for the deal, which is expected to close by the end of the year.

On Friday morning, shares in Canada's largest telecommunications company moved head 13 per cent, or $4.58, to $39.73 on the Toronto Stock Exchange, edging closer to the sale price.

Company chairman Richard Currie said in a release that preserving the share price of the acquisition is, in the opinion of the board, ``very much in the best interest of shareholders, the company and Bell Canada, particularly given current capital market conditions.''

However, some concessions were made to secure the financing, such as deferring BCE's common share dividend payouts until after the transaction is finalized, which could save the company hundreds of millions of dollars and improve its balance sheet.

In addition, the break fee was also raised to $1.2 billion to be paid by the buyers if the agreement fails, a sign that Ontario Teachers' Pension Plan is confident in the transaction.

The takeover of BCE was announced just over a year ago, a few weeks before credit markets began to unravel in North America in the wake of the sub-prime mortgage crisis that battered the U.S. housing sector and roiled credit markets around the world.

The credit crunch led many investors to tighten their wallets and led to the end or renegotiations of many leveraged buyouts in the United States that had been financed before money got tight.

The last hurdle to the BCE takeover by Teachers Private Capital and U.S. investors Providence Equity Partners, Madison Dearborn Partners and Merrill Lynch Global Private Equity was getting final agreements with the banks on financing terms.

The going-private acquisition will close ``on or before Dec. 11,'' the statement said.

The Friday announcement ended stock-market suspense over whether the banks, which are funding the highly leveraged takeover, would try to change the deal.

Reports had suggested that the bankers were pushing for a lower price tag on the deal, as well as more attractive loan covenants and interest rates.

Those doubts had been holding BCE shares well below the offer price. The stock had closed Thursday at $35.15.

BCE representatives declined to answer questions Friday about the transaction, including whether the company had made other concessions with the banks that weren't mentioned in the initial announcement.

``Just the fact that they've reached an agreement on the financing side. That was the big risk at this point,'' telecom analyst Troy Crandall of the MacDougall, MacDougall MacTier brokerage said in an interview.

``We still can't say... that this is a 100 per cent guarantee. There still is always risk in a transaction, but given that we've still got to go to December, I see this risk as being very mild at this point.''

In a related development, BCE confirmed that cellphone industry pioneer George Cope will succeed Michael Sabia as chief executive. Cope, a former Telus Corp. (TSX:T) executive who has been Bell Canada's president and chief operating officer since October 2005, takes the top job effective next Friday.

He was one of the early pioneers in the cellphone sector through his Toronto-area company, Clearnet Communications, which Telus acquired several years ago. He is seen as an able leader who can help Bell Canada expand its wireless operations, a lucrative part of the telecom market.

``The signing of the financing and credit agreements and the resolution of issues involved in funding this transaction are the essential milestones to closing with both the purchaser and the lenders,'' Sabia stated.

``The company's focus now has to shift to Bell Canada's operations, and the preparations for its privatization, making it an opportune time to turn to George Cope.''

The takeover of Canada's largest telecommunications company, originally set for early this year, has endured a series of delays that first set it back to June 30 and then later to sometime before the end of September.

Throughout the process it has cleared regulators and fought off a challenge from bondholders that went all the way to the Supreme Court.