CRTC approves Bell takeover, but with conditions

By Julian Beltrame, The Canadian Press

OTTAWA - The Ontario Teachers Pension Plan cleared a major hurdle to completing the biggest takeover in Canadian history Thursday after the federal communications regulator approved its acquisition of BCE Inc. (TSX: BCE.TO).

The CRTC said the approval was subject to certain conditions, most designed to ensure that the iconic company remains under control of Canadians.

During hearings in February and March, commission chairman Konrad von Finckenstein had expressed concern that although the pension fund was acquiring 51.6 per cent of Bell Canada's equity shares, it was only appointing five of the 13 directors, the same as its U.S. minority partners.

"Consistent with previous decisions, we have imposed conditions to address our concerns relating to corporate governance," von Finckenstein said in a news release.

"These conditions will ensure that control of BCE remains in Canadian hands once the transaction is completed."

The conditions include that the number of directors be fixed at 13, and that six must be nominated by the Canadian investors, one more than the non-Canadian partners, Providence Equity Partners, Madison Partners and Merrill Lynch.

As well, the chairman of the board must be a Canadian and cannot be the company's chief executive officer, and the independent programming committee must consist of Canadians not affiliated with the U.S. partners.

Under Canadian law, foreigners cannot control more than 46.7 per cent of a broadcaster or telecommunications company.

The regulator's approval was considered a major, although not the only remaining hurdle to the acquisition. A group of Bell Canada bondholders have appealed an unfavourable lower court ruling of their challenge to the Quebec Superior Court and Industry Canada must still give the go ahead.

As well, concerns have arisen in recent weeks that banks who had agreed to loan the partners the funds to make the $52-billion takeover possible may back out in the face of the financial markets turmoil that has made credit riskier and hard to attain.

The regulator released its decision at 4 p.m. after financial markets closed.

BCE shares closed up $1.22 at $36.94 on the Toronto Stock Exchange, well below the $42.75 a share offer price in the deal.