Canaccord: BCE Could Reach C$52 Per Share

Includes: BCE, TU
by: FP Trading Desk

Shares of Bell Canada Inc. (NYSE:BCE) closed above C$40 for the first time since 2001 on Thursday after it emerged that Telus Corp. (NYSE:TU) became the fourth group in merger and buyout talks with the Canadian icon.

Canaccord Adams analyst David Lambert thinks a Bell-Telus tie-up is the most likely option the market has heard about to date.

He thinks an offer from Telus could come in at the upper end of the C$42.75 to C$45 per share range previously expected from private equity buyers. However, that price may climb as high as C$52 in an all-stock deal given the potential synergies a combination would bring, Mr. Lambert told clients in a note.

Using leverage to pay cash for part of Bell shares for example, could increase Telus’ return on the deal, he added.

“In this scenario, Bell shareholders benefit from a bid higher than those expected by private equity funds and could also benefit from a potentially rising Telus share price (assuming a stock deal) as a result of the synergies,” Mr. Lambert said.

He raised his six month price target on Bell to C$45 from C$43.75 and has a “buy” rating on the shares.

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