A group led by the powerful Ontario Teachers' Pension Plan has reached an agreement to buy Montreal-based communications giant BCE Inc., paving the way for the biggest corporate takeover in Canadian history.

The all-cash offer for Canada's largest telecommunications company is valued at $51.7 billion or $42.75 a share, BCE said in a statement issued Saturday.

The winning bid was submitted by Teachers' Private Capital — the pension fund's private investment arm — along with Providence Partners Inc. and Madison Dearborn Partners, two private equity investment firms based in the United States.

The deal would add another huge asset to the pension fund, which is currently BCE's largest shareholder with a 6.8 per cent stake.

Teachers has a 49 per cent stake in Maple Leaf Sports and Entertainment, which owns the Toronto Maple Leafs, Toronto Raptors and the Air Canada Centre.

Aside from Bell Canada, BCE holdings include Telesat Canada, which operates satellite communications, and an interest in CTVglobemedia, the media company that owns the CTV television network and the Globe and Mail newspaper.

Teachers proved victorious over two remaining bids from groups led by the Canada Pension Plan Investment Board and Cerberus Capital Management LP.

Telus Corp., Canada's second-largest telecom company, dropped out of the bidding contest earlier in the week after complaining about the process. A Telus-BCE combination would have faced tough regulatory scrutiny as it would control most of Canada's local phone service and about 60 per cent of the wireless market.

Shareholders urged to approve deal

The board of governors of BCE is recommending unanimously that shareholders accept the deal. The media giant said it expects the deal to close in the first quarter of next year.

The equity ownership would be as follows: Teachers' Private Capital, 52 per cent; Providence, 32 per cent; Chicago-based Madison Dearborn, nine per cent; and other Canadian investors, seven per cent.

Michael Sabia, BCE's president and CEO, said the going-private transaction "delivers to our shareholders the economic benefit of the work done to focus on our core business and to strengthen Bell with a new cost structure and new competitive capabilities."

For consumers, the privatization of BCE likely won't have much impact because the company will still be run by the same management team led by Sabia.

The Toronto-based Ontario Teachers' Pension Plan, with assets of $106 billion in 2006, invests and administers the retirement funds for Ontario's 167,000 teachers and 104,000 retired teachers.

Jim Leech, senior vice-president of Teachers' Private Capital, said BCE's headquarters will remain in Montreal.

BCE stock closed at $40.34 on Friday in trading on the Toronto Stock Exchange.

BCE, which has more than 54,000 employees, had annual revenue of $17.7 billion in 2006. It has 18.2 million customer connections, including 5.8 million wireless subscribers, 8.64 million phone lines, 1.94 million internet subscribers and 1.82 million satellite television subscribers.

With files from the Canadian Press