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After almost two years of frantic takeover talks, court fights, salvage efforts and renegotiations, the epochal $35-billion acquisition of BCE Inc. is set to die Thursday unless the company wins a last-ditch appeal to the accountant who holds the fate of the deal in her hands.

Tomorrow is when Susan Glass of KPMG LLP must give her final opinion on whether the phone giant would be solvent after a debt-heavy buyout by Ontario Teachers' Pension Plan and three U.S. partners. If the answer is yes, the deal will go ahead. A no – as KPMG gave in a preliminary opinion announced by BCE on Nov. 26 – means the deal falls apart.

The verdict will mark the climax of the most-watched takeover battle in Canadian history, though the tale may yet have a long denouement in the courts.

If the sides end up before a judge battling about whether Teachers owes BCE a huge $1.2-billion break fee, as many analysts and investors expect, the circumstances surrounding the KPMG opinion will be seriously scrutinized.

There is a belief among some from the BCE camp who are upset at the potential loss of the deal that Teachers and its partners in the buyout tried to subtly sway KPMG toward a finding that BCE's assets wouldn't cover its liabilities in a liquidation, in hopes of getting out of the deal.

While sources say the discussions were collegial as the two sides put together a joint submission to KPMG, there were fundamental differences, for example, over the outlook for BCE's pension fund. Some analysts have calculated that after the market drubbing, BCE's pension plan is underfunded by more than $3-billion.

“Both the buyers and BCE jointly signed off on the model and the assumptions that were sent to KPMG,” said one person familiar with the process. “The only disagreement was over contingent liabilities.”

The buyers, which also include Providence Equity Partners, Madison Dearborn Partners, and Merrill Lynch's private equity arm, were leery of BCE's assumptions that double-digit annual returns would close the pension shortfall over 15 to 20 years.

BCE, for its part, doesn't accept that its assets should be valued on a fire-sale basis in current crazy markets for the purposes of the solvency calculation. Sources said the company was upset with values assigned to its wireless arm and its 15-per-cent stake in CTVglobemedia, the company that owns The Globe and Mail.

At the same time, the buyers argue that some of the asset valuations were generous. The wireless business, sources said, was pegged at a price about 30 per cent above market to account for scarcity value.

The telecom company has now hired a second auditing firm, PricewaterhouseCoopers, in a bid to change KPMG's mind. BCE spokesman Mark Langton declined to comment on the situation.

If the agreement dies, rather than walking away with the $42.75 a share promised by Teachers last summer in the final heady days of the buyout binge, BCE shareholders will be looking at a future as owners of stock in a company that's cash-rich but faced with serious challenges on the technology front, stiff competition and a slowing economy.

Yet in some ways, Teachers got what it wanted when it put BCE in play. As the biggest shareholder with 6.3 per cent of BCE, the pension fund was upset with what it perceived as slow-footed management that left BCE shares undervalued.

Teachers sought to buy BCE, put in new management, slash costs and sell assets.

With the glaring exception of actually buying BCE, most of those goals have been accomplished. George Cope, handpicked by the buyers, is in the chief executive officer's chair and Michael Sabia is gone.

Mr. Cope has already implemented the would-be buyers' 100-day plan, shedding workers, revamping a tired advertising campaign and trying to renew focus on service.

Now many investors expect that he will restart their dividend, perhaps pay extra to make up for lost payouts and keep investing in technology.

Investors such as Matthew Stewart, a retail shareholder, look at a public BCE as a source of high yields and modest growth.

Mr. Stewart likes the company's Bell Canada brand, huge customer base and proven ability to generate heaps of cash. He's optimistic that the stock will climb into the $25 to $28 range once BCE announces its new dividend policy.

“I think it's likely to be something of a steady-Eddie,” he said. “The task of the executives will be how to manage the cash flow.”

With a file from reporter Andrew Willis in Toronto