UPDATE 6-Telus backs away from BCE, CPP confirms bid

(Adds CPP/KKR group submits bid, Cerberus plans to bid, Caisse withdraws)

By Wojtek Dabrowski and Nicole Mordant

TORONTO/VANCOUVER, June 26 (Reuters) - Telus Corp. (T.TO) said on Tuesday it will not make an offer for Canadian telecom rival BCE Inc. (BCE.TO), while one of the buyout consortiums scrutinizing BCE's books confirmed it had submitted a bid.

Late on Tuesday, a source in the bidding group led by the Canada Pension Plan (CPP) Investment Board and which includes U.S. private-equity group Kohlberg Kravis Roberts & Co. said the consortium had entered a bid to buy BCE.

As well, a spokesman for U.S.-based Cerberus Capital Management said it will also make a bid for BCE, Canada's biggest telecom company.

Telus, which announced just last week it was in talks to explore buying BCE to create a "national champion" and trumpeted the benefits of such a union, said in a statement there were problems with BCE's bid review process.

"The inadequacies of BCE's bid process did not make it possible for Telus to submit an offer," Vancouver-based Telus, Canada's No. 2 phone company, said.

A spokesman declined further comment.

The CPP consortium has also seen buyout firm Onex Corp. (OCX.TO) and Caisse de depot et placement du Quebec, a provincial pension and insurance fund manager, leave its ranks, according to newspaper reports that cited unnamed sources.

Officials of CPP and Onex weren't immediately available for comment. The Caisse confirmed late on Tuesday it had withdrawn from the CPP group.

BCE, which owns phone company Bell Canada, is reviewing its alternatives in a bid to inject life into its shares and boost value for investors. Since the takeover talk began in April, the stock has risen about 30 percent.

Media reports said the deadline for bids for BCE, in potentially the largest takeover in Canada, was 9 a.m. EDT (1300 GMT).

A bid of C$45 a share for BCE would value its common equity at about C$36 billion ($34 billion).

"The bidders don't appreciate the rush Bell and its advisers are forcing on the process," National Bank Financial analyst Greg MacDonald wrote in a research note.

"In our view, the bidders are attempting to buy more time to do due diligence as this is a major deal with multiple possible scenarios."

BCE spokesman Bill Fox said the company has been successful in making the process "truly competitive."