BCE-Nortel $73 B Spin Off

In the largest transaction in Canadian corporate history BCE will divest to its shareholders most of the corporation’s 39.2 per cent interest in Nortel Networks Corp., thus ending the 105 year-old relationship between the two companies. BCE will retain a 2.2 per cent interest in Nortel.

The transaction is structured as a tax-deferred arrangement. Under the terms of the arrangement, a new company is being created which will own all of Nortel’s shares. Nortel shareholders will receive an equivalent number of shares in the new company. BCE shareholders will receive .78 of a share in the new company for each of the BCE shares held while still retaining their BCE shareholding. Based on current share valuations, the new company share “wind fall” to existing BCE shareholders is set at $73 billion. BCE is Canada’s most widely owned stock with approximately 500,000 shareholders.
One of the drivers behind the transaction was the fact that Nortel’s stellar performance was overshadowing BCE and depressing the underlying value of BCE and its other significant holdings, i.e. Bell Canada, Bell Mobility, BCE Emergis, Bell Canada International, Bell ExpressVu and Telesat Canada. In a market where stock is commonly used as currency to make significant acquisitions, Nortel’s success was placing BCE at a significant disadvantage.

In-house counsel at Nortel heavily involved in the transaction are Nicholas J. DeRoma and Deborah J. Noble. Ogilvy Renault is representing Nortel. The Ogilvy team is comprised of Michael J. Lang, Andrew Fleming, Guy Fortin, Kenneth J. Snider, and Michael Bennett.

At BCE, in-house counsel Martine Turcotte is playing a central role. BCE has retained Davies, Ward & Beck to represent it on corporate and securities matters and Osler, Hoskin & Harcourt LLP on tax matters. The Davies team is comprised of Jean-Paul Bisnaire, Mark Connelly, Steven Harris, and Siobhan Monaghan. The Oslers team is comprised of S. Firoz Ahmed, Andrew H. Kingissepp, Daniel R. MacIntosh, Julie A. Colden and Kimberley J. Wharram.

Lawyer(s)

Andrew Fleming Julie A. Colden Mark Q. Connelly Firoz Ahmed K. A. Siobhan Monaghan Daniel R. MacIntosh Michael Bennett Kenneth J. Snider Guy Fortin J-P. Bisnaire Michael J. Lang Steven M. Harris Andrew H. Kingissepp Kimberly J. Wharram