Onex Joins the Bid

Onex Corp. has joined bidding group for BCE Inc., which already includes the Canada Pension Plan Investment Board, the "Caisse de depot et placement du Quebec" as well as U.S. buyout firm Kohlberg Kravis Roberts & Co.

CPP board president David Denison said on Monday:"The addition of Onex strengthens our Canadian-led consortium as it remains focused on the due diligence process for the potential acquisition of an important Canadian organization". He added: "The bidding group would still welcome the opportunity to add additional Canadian pension funds to our consortium."

Andrew Sheiner, Onex managing director, mentioned that Canada's largest private equity company has very strong relationships with every member of the consortium and partnered with the CPP and the Caisse on prior investments.

Canada's largest pension fund is CPP, while the Caisse, is the country's largest institutional investor, managing the funds of 22 Quebec pension and insurance funds. KKR is one of the largest buyout firms of the world.

Onex has also participated in some of the biggest Canadian buyouts during the last decade, which included the purchase and then public offerings of Celestica Inc. and Spirit AeroSystems, Inc., which was a unit of Boeing Co. CPP has investments in that deal. The Caisse is also one of the major investors in Onex's buyout funds.

Onex managing director Andrew Sheiner said: "We are delighted to have the opportunity to pursue the acquisition of one of Canada's leading companies with three outstanding partners."

"It's a big piece of equity for them and they'll be able to bring fantastic executional capabilities on the deal side and operational capabilities post-acquisition if we're successful," said the source, which is close to the consortium, "Onex is very good with turnaround and driving operational changes and is a huge addition and shores up our strategy of doing a Canadian deal led by Canadians."

The consortium is still trying to get three additional pension funds as participants, which are OMERS and provincial pension funds from B.C. and Alberta.

However, according to federal law, Canadians must own minimum 53% of any company. Taking into account the amount of any deal, which costs more than $30-billion, and rather poor Canadian capital market, many analysts doubt about availability of domestic funds to support three bids. Each of them will require $3-billion-plus in Canadian equity. If the foreign ownership part becomes larger, there would be even more bids from U.S. private equity firms, and from U.S. phone companies.

HISTORY
Since 1983, Onex acquires attractive companies at fair prices and, in partnership with operating managers, grows them and ultimately realizes on the value created through a variety of strategies.

Since early 2004, Onex investments in large-cap companies have been completed with funding from Onex Partners LP, our US$1.7 billion fund, and Onex Partners II LP, our US$3.5 billion fund. Onex is active in the North American mid-cap market as well through ONCAP. Onex controls the General Partners of all these funds.

Onex also pursues opportunities to create value by putting a portion of Onex' substantial cash resources to work in additional asset classes that we believe will generate superior returns. Through Onex Real Estate Partners, the acquisition partnership with a team of highly experienced industry professionals, Onex is investing in high-quality commercial and multi-unit residential real estate. Onex may invest in other asset classes where they believe they can achieve appropriate returns and where the activities can lead to acquisition opportunities. -Alla Harutyunyan for HULIQ.COM

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