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The Bid for Bell Canada Enterprises (BCE)

Published 28 Jan 2013
Reference 5737
Region North America
Summary

Bell Canada, a publicly listed Canadian telecom firm, receives takeover offers from LBO (leveraged buyout) firms. A strategic acquirer, Telus, is also potentially interested. The case describes the synergies and efficiency gains available to both types of acquirer, which allows for a discussion about the respective contributions that a financial buyer (PE/LBO firm) and a strategic acquirer could bring to the target firm.

Teaching objectives

(1) To examine the rationale for firms to go through an LBO – industry, financial, resource-based drivers. (2) To compare and contrast the sources of value creation generated by financial vs. strategic buyers. (3) To examine the strategy, notably the internal restructuring actions, that a target can deploy when facing an LBO “threat”. (4) To perform a financial valuation of BCE: (i) as a stand-alone firm (DCF); (ii) with a strategic buyer (DCF); (iii) with a financial buyer (APV). (5) To discuss the role of the different stakeholders (shareholders, managers, bondholders) and how they capture value through an LBO.

Keywords
  • LBO
  • Financial buyers
  • Strategic buyers
  • Value creation in M&As
  • Financial restructuring
  • Synergies
  • Bondholders
  • Governance
  • Q21213
  • Corporate Governance
  • Value Creation, Strategy and Implementation
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