Sept. 21 (Bloomberg) -- BCE Inc. Chief Executive Officer Michael Sabia, who failed to match competitors' stock gains, will step down as the C$51.7 billion ($51.7 billion) takeover of Canada's biggest phone company nears completion.
Investors approved a takeover by the Ontario Teachers' Pension Plan at a shareholders' meeting today in Montreal. Sabia, 54, said he expects to leave once the transaction closes in the first quarter.
Sabia took over more than five years ago, charged with unraveling his predecessor's C$13 billion expansion into media and computer-services companies. BCE's shares have trailed rivals' as the Montreal-based company lost landline customers and failed to match competitors' wireless revenue growth.
``A change at the top will give BCE a fresh start,'' Greg Eckel, a fund manager at Morgan Meighen & Associates in Toronto, said in an interview. His firm manages C$1.3 billion, including BCE shares, and voted for the deal. ``There was some disenchantment with the stock performance.''
BCE rose 8 cents to C$40.15 at 4:10 p.m. in Toronto Stock Exchange trading. The shares have risen 42 percent in the past five years, compared with gains of more than fourfold for Telus Corp. and Rogers Communications Inc.
BCE agreed in June to be bought by a group led by Teachers', in what would be the biggest leveraged buyout in Canada. The purchase includes C$16.9 billion in debt, preferred shares and minority interests. Buyout firms Providence Equity Partners Inc. and Madison Dearborn Partners LLC, and a group of unidentified Canadian investors, are also part of the offer.
George Cope, chief operating officer at the company's Bell Canada phone unit, is the ``logical choice'' to succeed Sabia, Eckel said. Cope, 46, joined BCE in 2005 from Telus, where he was head of the wireless unit.
``Last spring, during the strategic review, I indicated to the chair of the board that should we reach an agreement which delivered real, compelling value to shareholders, it might be the right time for me to move on,'' Sabia said at the meeting. ``I think this transaction delivers this value.''
After taking over in 2002, Sabia sold businesses such as the Telesat Canada Inc. satellite unit and a stake in computer- services company CGI Group Inc. to return BCE to its roots as a phone company.
``He has done much to transform the company, but there is still plenty of work to be done,'' said Iain Grant, managing director of researcher SeaBoard Group in Toronto.
BCE reported wireless revenue growth of 7.4 percent in the second quarter, trailing the 25 percent gain at Toronto-based Rogers, Canada's largest wireless company. Vancouver-based Telus, Canada's second-largest phone company, had wireless growth of 11 percent.
Teachers', BCE's largest shareholder, decided to take the company private after local-phone customers fled. The firm, which has C$106 billion in assets, may spark growth by giving BCE the money to build up its networks, according to National Bank Financial's Greg MacDonald.
``The public markets don't view those types of investments favorably because of the extended payback period,'' the Toronto- based analyst said in an interview. ``With the private companies, there are only four or five guys sitting around a table, rather than hundreds or thousands of shareholders. They can make decisions a lot more effectively.'' He rates the shares ``sector perform.''
BCE lost 114,000 local-phone subscribers in the second quarter. More than 1 million customers have defected in the past three years, while landline revenue has dropped for five straight years.
Phone companies in the U.S. have tried to spur growth by upgrading their networks to carry more video and data. Verizon Communications Inc., the second-biggest U.S. phone company, is spending $23 billion to develop a high-speed fiber-optic network to win customers back from cable companies.
Teachers' also has a stake in Manitoba Telecom Services Inc., Canada's third-biggest telephone company.
The Canadian Competition Bureau said today it won't challenge the BCE purchase. Owning stakes in both companies won't stifle competition because Teachers' can't appoint directors to Manitoba Telecom's board, the bureau said.