If you’ve been following Canadian financial news lately, you’ve most likely heard about the whole BCE take-over drama and controversy. Is the deal going to go through? Will they pay shareholders the original agreed upon cash amount? Or will they renegotiate the deal with a lower amount?
It all began with the Ontario Teachers Pension group making a bid for BCE with financing from the major banks. Everything was fine and dandy with the deal basically done, then all hell broke loose. There was a court battle along with speculation that the lenders would have trouble funding the deal.
We now have an agreed upon, court approved, all cash deal for $42.75. However, the current share price sits at approximately $39.50. Is this an opportunity to make $3.25 dollars/share or 8.2% with reduced risk? With the deal closing on Dec 11, 2008, that represents about 5 months holding time which, if annualized, would equate to a return of 19.7%.
So what do you think? Is BCE a buy and hold at this price level for a quick profit? Is the 8% return worth the risk that the deal can potentially still fall through?
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Disclaimer: I do not own shares of BCE. This article is not a recommendation to buy BCE.
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