The NYT’s Ian Austen has a fascinating article today about, to quote his headline,
"The
Winding Road to a Giant Deal to Sell Bell Canada". It seems that the
biggest buyout in history came as a result of an auction run idiosyncratically
by the target company, in conditions of no little secrecy and mystery.
I’m sure that a long article will be written at some point about exactly what
happened. But the two opposing views are already clear, and they’re held not
only by participants but also by neutral investors. While GlobeInvest Capital
Management’s Peter Breiger is quoted in the NYT as saying “Oh
dear, oh dear, oh dear,” Guardian’s Gavin Graham is quoted
in the Globe and Mail as saying that "It’s certainly a very generous
offer," and that "it’s difficult to see any other private equity bidder
being able to match that with a straight face."
It seems that BCE controlled the bidding process much more tightly than is
normally the case in takeover situations. Because Canada’s takeover rules say
that a Canadian bidder has to retain majority control, BCE was scared that all
likely Canadian bidders would team up into a consortium, thereby making a competitive
bid much more difficult. So the company "took it upon itself to tell would-be
owners who they could, or could not, bring in as partners," according to
the NYT.
The final bid certainly looks as though it’s fully valued, and in general one
shouldn’t read too much into the fact that rival bidders dropped out at the
last minute and are now complaining loudly to anybody who will listen. Such
complaints are relatively common from alpha-male private-equity types who hate
to lose anything. On the other hand, the enormous number of advisers involved
in the process, as well as its extraordinary opacity, make it quite easy for
the buck to be passed endlessly from one person to another if, as alleged, BCE
managers did have an ulterior motive of keeping themselves in place and personally
making as much money as possible.