Bell Canada Agrees To $49 Billion Deal

OTTAWA, June 30 — Bell Canada’s directors endorsed an offer on Saturday from the Ontario Teachers’ Pension Plan and the private equity firm Providence Equity Partners to take the company private. The deal for Bell Canada, worth about 51.7 billion Canadian dollars ($48.8 billion), would be the largest leveraged buyout ever.

If approved by shareholders and regulators, the deal would also be Canada’s largest takeover to date.

The offer for Bell Canada, the country’s largest communications company, includes 34.8 billion Canadian dollars in cash and the assumption of 16.9 billion Canadian dollars in debt and other factors.

The deal came together quickly, as Bell received bids from three groups on Tuesday morning. The board began reviewing them Friday before making a decision early Saturday. The Canada Pension Plan Investment Board and the buyout firm Kohlberg Kravis Roberts offered an all-cash deal. Cerberus Capital, along with Canadian partners, had proposed a more complex structure that would have kept some Bell equity publicly traded.

The offer led by the teachers’ pension plan sets a sale price of 42.75 Canadian dollars a share. In the last year, the shares have traded as low as 25.32 Canadian dollars a share.

“This represents very, very substantial value for our shareholders,” Michael J. Sabia, Bell’s chief executive, said in a conference call with reporters. “Bell will continue as a Canadian company held in the majority by a Canadian pension plan.”

Under the terms of the offer, the Teachers’ Private Capital Group will hold 52 percent of Bell, and Providence will own 32 percent. The investment firm Madison Dearborn Partners is taking a 9 percent stake and unidentified Canadian investors will own the remaining 7 percent.

The teachers’ pension plan is already Bell’s largest shareholder, with a 6.3 percent stake. It has made little secret of its dissatisfaction with Bell’s lagging share price and the company’s management.

Telus, Bell’s smaller but more successful competitor in Western Canada, had announced its intention to bid. But just after Tuesday’s deadline, it withdrew, citing unspecific complaints about the auction.

The unusually secretive process was also unpopular with many investors who saw the value of their shares swing based on rumors and incomplete news reports.

Richard J. Currie, Bell’s chairman, defended the auction process on Saturday and suggested that complaints about it were simply attempts by bidders to gain advantage.

“We were charged with managing one of the world’s largest private equity transactions,” he said. “We had to do it within the relatively small market of Canada.”

Bell is one of Canada’s most widely held companies, with retail investors making up 60 percent of its shareholders.

Those shareholders will receive a healthy premium for their stock but will lose Bell’s dividend payments, the main draw for many individual investors. Long-term shareholders may also face substantial capital gains taxes.

Canadian law prohibits foreign control of telecommunications companies.

There has been speculation that Telus would return with a bid, which Mr. Sabia said Bell would still consider. The deal includes a break-up fee of 800 million Canadian dollars, however, which might make it difficult for Telus to make a bid.

Stacey Masson, a spokeswoman for Telus, declined to comment.

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