BCE shares rise after Quebec court approves buyout

By Wojtek Dabrowski

TORONTO (Reuters) - Shares of BCE Inc (BCE.TO: Quote, Profile, Research), Canada's biggest telecom company, rose more than 5 percent on Monday as investors reacted to a Quebec court ruling that pushed the company's C$34.8 billion ($35.2 billion) buyout one large step closer to completion.

The rise in the stock came after the Quebec Superior Court gave its approval to the buyout by a group of private-equity investors led by the Ontario Teachers' Pension Plan. The court also dismissed all claims asserted by some bondholders who insisted the deal was unfair.

"Investors should assume the bondholders will appeal, but this goes a long way to eliminating one of two major risks to this deal," National Bank Financial analyst Greg MacDonald wrote in a note to clients.

Mark Meland, a lawyer for the bondholders, said on Monday that an appeal has to be lodged by March 17.

"We're considering an appeal," Meland said. "It's certainly a very strong possibility, and ultimately the parties will make a decision."

BCE jumped C$2.05, or 5.7 percent, to C$37.85 on the Toronto Stock Exchange. However, even though the shares spiked, they are still below the C$42.75 price that Teachers' and its U.S. private-equity partners are offering for the Montreal-based company.

This highlights the second major risk facing the takeover: funding. Some investors are still worried the deal could be delayed, repriced or scrapped altogether given the recent turbulence in credit markets and the impact on banks.

BCE and Teachers' have dismissed concerns over funding, saying the deal has firm financing. BCE said Friday the deal remains on track to close early in the second quarter, subject to any possible appeal by bondholders.