weiwentg

Last Legal Stand in the BCE Privatization Deal

BCE is starting to look like a possibly lucrative arbitrage play. The banks involved seem to have been saying all the right things, and now the suit above was dismissed. The only risks I can remaining are:

For non-Canadian arbitrageurs, there's currency risk. The USD was 1 for 1 to the CAD earlier, but today (11/21), it's CAD$1.29 to the USD. That means that the CAD$42.75 buyout offer is now worth $33 or so. Of course, BCE is trading about $26.50 on the NYSE. Even if the CAD somehow depreciates to $1.50 to the USD, US investors would still get US$28.50.

I'm a bit more worried that the deal might be delayed or renegotiated lower. Starting about 16 minutes into this interview, Mark McQueen of Wellington Financial in Canada believes that the banks will want to renegotiate and that a lower share price will be better for everyone involved (except BCE arbitrageurs). The interview was conducted at the end of October. The banks have been saying all the right things and TD reiterated its commitment in early Nov.