Topic: Blue Chip Stocks

BCE INC. $60.87

BCE INC. $60.87 (Toronto symbol BCE; Shares outstanding: 868.6 million; Market cap: $52.9 billion; TSINetwork Rating: Above Average; Dividend yield: 4.5%; www.bce.ca) recently agreed to acquire MANITOBA TELECOM $37.67 (Toronto symbol MBT; Shares outstanding: 74.4 million; Market cap: $2.8 billion; TSINetwork Rating: Average; Dividend yield: 3.5%; www.mts.ca).

BCE is offering $40.00 cash for each MBT share investors hold. Or, Manitoba Tel shareholders can choose to receive 0.6756 of a share in BCE for each MBT share.

However, BCE has capped the total amount of cash it will pay. As a result, most Manitoba Tel shareholders will get 45% in cash and 55% in BCE shares. Investors won’t have to pay capital gain taxes on the stock portion they receive until they sell it.

BCE is a buy. Manitoba Tel investors should pick the all-stock option, which is currently worth $41.12 per share, compared to the $40.00 all-cash option.

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