Investors see Wall Street's woes putting the BCE buyout in doubt, as shares in the telecom company sell off early Monday on fears the $35-billion takeover may not play out as expected.
With financial markets in turmoil and Lehman Brothers filing for bankruptcy, share in BCE are off 3 per cent at $38.35. That's more than 10 per cent below the $42.75-a-share that a consortium led by the Ontario Teachers Pension Plan is scheduled to pay for BCE by Dec. 11.
This is the largest spread seen since July, when the four banks lending on the BCE takeover won more time to finance the buyout, in return for agreeing to pay a higher break fee if the deal should fail.
There have been no developments on the BCE front in recent days -- marketing of the debt needed to fund the takeover is expected to begin in mid-October. Wall Street financiers are focused on their own careers Monday, rather than a takeover that won't close until December.
The falling share price simply reflects the fact that investors were more skeptical Monday that the deal will close than they were on Friday, given the well-documented problems in credit markets. If the deal was to fall apart, BCE shares would plunge to about $30.