Summary

The case introduces Bell Canada, an enterprise engage in the telecommunication industry and recognized as one of the leading telecommunication organization in Canada, with over $17 billion in revenues in 2006. The company was established, after Graham bell in 1877, assigned 75% of his telephone patents to his father, he later with friends started first commercial telephone business in Canada. However, later he sold his rights to national Bell Telephone Company and in 1880, they established Bell systems and developed Bell Telephone Company in Canada. Furthermore, it can be assessed that, recently the service provided by them reach over 98% of the Canadian population. The core business of Bell Canada included Bell wireline, Bell Aliant and Bell media. In which, Bell Canada provided its customers landline, internet services, radio broadcasting, IT services and much more. Which, in turn, had allowed the company to secure a significant share of the market, while being recognized as industry leader. In addition to this, the case further illustrates that, Bell Canada was faced by a critical decision regarding the merger with Telus, a strategic buyer and the second largest telecommunication organization in Canada after Bell. Other than that, it could go private with financial buyers. Therefore, it can be evaluated that, the senior management of Bell Canada needed to develop effective plans to analyze their situation and make appropriate decision regarding the alternative present to the company.

How did Bell Canada became a takeover target? Why was it attractive to private Equity Buyers?

After experiencing tremendous growth in its stock price and share in the market, the senior management of the company and certain analyst realized that, a major change was necessary. In which, BCE rejected a number of advances to take the firm private from the regulatory bodies. However, it could be assessed that despite the pushback from BCE, the partnership of KKR, CPP and providence with OTPP to pursue the leverage buyout of Bell Canada enterprise, after they filed with U.S SEC. Which, in turn, compelled BCE to consider and started talks on its own initiative with various private equity firm and even with its rival Telus.

The Bid for Bell Canada Enterprise Harvard Case Solution & Analysis

Moreover, it can be assessed that, the Bell Canada had tremendous appeal amongst private equity firms. Which could be attributed to its significant share of the market where, BCE had been successful in securing strong market position and being recognized as a leader in wireline, wireless and media services. The private equity firms could exercise leverage buyout where, the acquisition in done through significant amount of borrowing in the form of loan or bond from lenders available in the market. Usually the leverage buyout scenario had an 80% debt and 20% equity ratio. Furthermore, the private equity firms, which included KKR/CPP, Providence/OTPP and Cerberus believed that, the acquisition of BCE through leverage buyout would enable them to make effective changes in the organization, which the current management would not be able to do, while the company was public. Which, in turn, could further enhance its position in the market and result in generating additional revenues.................

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