Toronto stocks point lower on BCE uncertainty

Thu May 22, 2008 9:04am EDT
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*BCE to drag TSX index lower

*Bullish oil may prolong Wednesday's energy selloff

TORONTO May 22 (Reuters) - The Toronto Stock Exchange's main index was set to fall on Thursday, adding to the previous day's steep drop, as BCE Inc (BCE.TO: Quote) looked to be in trouble and oil stoked inflation concerns.

BCE -- Canada's top telecom firm and a major player on the TSX -- was set to drop after a Quebec court backed debtholders who claimed the proposed sale of the company was unfair.

The court said BCE failed to prove that the buyout -- by Ontario Teachers' Pension Plan and its U.S. private equity partners -- could have been structured to provide a satisfactory share price, without harming debenture holders. For details, see: [N21449300]

The ruling jeopardizes the C$34.8-billion takeover and leaves BCE vulnerable to a selloff on Thursday morning.

"The one-hundred-dollar question is whether the deal will still be in play in six to nine months," said Francis Campeau, broker at MF Global Canada in Montreal, who suggested BCE stock will drop from C$37.12 to between C$31 and C$32 in early activity.

"But the market will not price out (the takeover) 100 percent," he said.

Potentially adding to the malaise, the selloff among oil and gas producers could continue on Thursday even as crude soared further, above $135 a barrel.   Continued...