CNBC’s Faber: Bidding War Brewing For Bell Canada

A battle among Canadian pension funds and U.S. private equity firms is brewing for control of Canada’s biggest telecommunications company, CNBC’s David Faber reported.

BCE , parent of Canadian phone company Bell Canada, confirmed Tuesday that it is in exclusive discussions to sell the company to a group of pension fund managers that would take the telecom private.

U.S. private equity firm Kohlberg Kravis Roberts is a minority partner in the group, which is being led by the Canada Pension Plan Investment Board, the Caisse de depot et placement du Quebec and Canada's Public Sector Pension Investment Board. Canada's ownership laws prevent a foreign suitor from owning more than 46% of a telecommunications company.

The group does not include the Ontario Teachers Pension Plan, which owns 5% of BCE and had expressed interest last week in “exploring options that might lead to a bid for the company,” Faber said. That news sent shares up on speculation that BCE would soon be in play.

Providence Equity Partners, another firm that could be a potential bidder, is also not in the current group, Faber said.

The sale of the company has been rumored since late March, but two weeks ago
BCE denied it was in talks with KKR. But it stopped short of saying it had never discussed a buyout.

BCE Chief Executive Michael Sabia had resisted suggestions of a takeover, in hopes his restructuring efforts of BCE would end a long period of flat stock-market performance.

Bell has been under pressure from cable TV operators in home phone and Internet businesses, losing 150,000 of its 28 million residential lines in the last quarter. It is also facing stiff competition from rivals Rogers and Telus in its cell phone operations.