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When the Ontario Teachers’ Pension Plan launched its campaign to buy BCE, Canada’s biggest telecom company, in June 2007, the share rose to C$41.76, only pennies below the price that Teachers’ and its group of private investors were offering.
By May of this year, the stock was back at a low of C$31.80 reflecting a Quebec court ruling that threatened to scupper the C$34.8 billion ($34.1 billion) deal, the world’s largest leveraged buyout.
“It’s been a remarkable roller-coaster,” said Gavin Graham, chief investment officer at Guardian Group of Funds.
“I think you really had to take a view: did you think this deal was going to go through? Obviously, lots of people didn’t believe that.”
BCE stock was once known as a stable widows’ and orphans’ issue that paid big dividends.
It began its rapid ascent from the C$32 level in April of last year in the wake of buyout rumors.
But when financial markets were seized by the credit crunch last summer, anxiety that the deal could be delayed, repriced or scrapped altogether drove the share price down again.
By late January of this year, BCE’s shares were trading in the mid-C$30 range, and the stock was plagued by volatility as speculation over the status of the deal continued to swirl.
The company’s shares dove to the year low in May following an unexpected decision by a Quebec court to side with bondholders who were attempting to scuttle the deal.
But investors took heart as BCE filed a motion for a fast-track appeal to the Supreme Court of Canada and the stock was yanked up by as much as 10 percent after the top court gave the buyout the green light.
By midday on Friday, BCE stock jumped to C$39.70, or 13 percent, on a hefty volume of 19.5 million shares on the Toronto Stock Exchange, but still below the offer price.
“People are still sufficiently nervous that it might possibly, at the very last moment, not go through,” Graham said.
$1=$1.02 Canadian Reporting by Jennifer Kwan and Leah Schnurr; Editing by Peter Galloway