Jonathan Ratner, Financial Post Published: Wednesday, December 10, 2008
Related Topics Accounting and Payroll Services
Professional Services Sector
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PricewaterhouseCoopers' post-transaction solvency opinion for BCE Inc. (BCE/TSX) may not represent an alternative to KMPG but it could help the telecom giant get a break fee.
The burden PwC's opinion could impose on the purchasers suggests the potential for a lawsuit from BCE to receive a break-fee, according to Canaccord Adams analyst David Lambert. He hiked his price target on BCE shares to $26.50 from $25.00 as a result.
Based on BCE's statement, PwC's solvency opinion does not represent an alternative to KPMG, he told clients. "However it points out that KPMG may be wrong in its valuation of BCE, which resulted in its inability to provide a solvency opinion, and suggests that KPMG should review its valuation assumptions regarding the BCE solvency post-closing of the deal."
Mr. Lambert says the ball is now in the Ontario Teachers' Pension Plan's court since it could talk with BCE to determine if the basis for KPMG's opinion was correct.
However, he thinks it is unlikely that KPMG would reverse its opinion and allow the deal to close on time.
UBS analyst Jeffrey Fan suggested that BCE could simply be trying to fulfil its obligations by seeking another firm to help satisfy the solvency opinion condition. However, PwC was not engaged by the purchaser, which is a condition in the agreement.