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BCE stock was weighed down Wednesday by latest in a string of rumours, all unfounded, to dog the buyout. This time around, there's talk the $52-billion telecom takeover is in trouble because cash-strapped Merrill Lynch wants bail out on its purchase of a $475-million stake from one of the buyout's central players, Providence Equity Partners. The conspiracy theory has this rumoured exit derailing the entire deal. Merrill Lynch's private equity arm bought a portion of Providence's holding in October. The New York dealer has since seen its balance sheet battered by credit losses, and a new CEO take the reins. Chatter that Merrill may walk - talk that sources close to BCE and the buyout group dismissed - helped drive BCE shares down $1.04 or 2.7 per cent Wednesday to $37.01 on the TSX. Through all this noise, BCE and a buyout group led by the Ontario Teachers Pension Plan consistently say they expect to complete the transaction at $42.75 a share. Teachers, backed by Providence and Madison Dearborn Partners, agreed to buy Bell Canada in July in one of the largest leveraged buyouts (LBO) ever attempted. The deal was cut just before the credit crunch hit, and changing sentiment on whether the LBO will actually close has bounced BCE shares around since the summer. The purchase requires regulatory approval and is expected to wrap up in April. Fears that BCE bondholders could block the takeover are also making the rounds - these creditors are suing the telecom company in Montreal because the LBO will knock back the price of BCE bonds. A verdict in that suit, which lawyers say has little chance of success, is likely three weeks away. Other chatter that has come and gone around BCE includes speculation that the banks lending to the Teachers group, led by Toronto-Dominion Bank and Citigroup, will renege. To date, lenders have been nothing but supportive. What could be behind all the nasty speculation? Well, BCE is a big, liquid stock, and it's one of the few large takeovers still playing out. Buying Bell Canada now, and collecting both a scheduled dividend and $42.75 a share if the deal does close as expected means making a sizeable return, a profit that gets even sweeter if stock can be bought on a rumour-inspired dip.

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