November 24, 2008 / 4:27 PM / in 9 years

BCE shares rally after Citigroup bailout

(In U.S. dollars unless noted)

TORONTO, Nov 24 (Reuters) - Shares of Canadian telecom giant BCE Inc (BCE.TO) jumped about 10 percent on Monday after the U.S. government agreed to bail out Citigroup Inc (C.N), one of the banks financing BCE’s C$34.8 billion ($28.3 billion) buyout.

BCE shares shot up 9.9 percent, or C$3.41, to C$37.96 on the Toronto Stock Exchange after the U.S. government said it would inject $20 billion of new capital into Citigroup and agree to shoulder most of the potential losses on $306 billion of high-risk assets.

Montreal-based BCE, Canada’s biggest telecom company, is being bought out by a group of private-equity investors led by the Ontario Teachers Pension Plan.

BCE’s shares have long languished below the offer price of C$42.75 a share as investors fretted the deal could be repriced, delayed or abandoned altogether because of problems in the financial markets.

The deal is being financed by Citigroup, Deutsche Bank (DBKGn.DE), Royal Bank of Scotland (RBS.L) and Toronto-Dominion Bank (TD.TO).

The buyout is set to close by Dec. 11.

    ($1=$1.23 Canadian)

    (Reporting by Wojtek Dabrowski; editing by Peter Galloway)

    ((wojtek.dabrowski@reuters.com; +1-416-941-8009; Reuters Messaging: wojtek.dabrowski.reuters.com@reuters.net)) Keywords: BCE/SHARES

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