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It should have been one of the defining moments of Darren Entwistle's career. At 6 p.m. on Monday, June 25, on the eve of a bidding deadline for BCE Inc., the 44-year-old chief executive officer of rival Telus Corp. strode into a Vancouver board meeting with a 45-page presentation. The PowerPoint slides, constructed over the weekend by sleep-deprived investment bankers, detailed Telus's impending offer for BCE, outlining everything from price and anticipated cost savings to strategic considerations and an action plan for winning crucial approval from competition regulators.

Just three weeks earlier, Mr. Entwistle stood before this same group and successfully sought permission to submit an expression of interest for his Montreal-based competitor, the first step in attempting what for Telus would be a transformative acquisition that would likely entail laying out more than $35-billion. A combined BCE-Telus would dominate Canada's cellphone market, and would give Mr. Entwistle a chance to dream big, with a platform from which to launch takeovers of U.S. telecommunications players.

On this late-June evening, however, according to people familiar with the meeting, Mr. Entwistle came armed with a recommendation rather than a request: Fed up with a month-and-a-half of fitful discussions, and unswerving in the belief that BCE management had strewn his path with obstacles, Mr. Entwistle told his fellow directors that Telus should drop out of the auction, leaving three private equity bidders to fight it out for BCE.

Then, in a gesture hinting at just how difficult it was for him to abandon the chase, Mr. Entwistle asked his top lieutenant, chief financial officer Bob McFarlane, to nevertheless walk the board through all 45 pages of the presentation.

When Mr. McFarlane finished, the directors agreed that Telus would withdraw, but refrain from announcing its decision until 9.30 the next morning, when all the other bids would already be submitted. That would avoid giving the private equity players an excuse to lower their offers.

This might have been viewed as a gracious exit, magnanimous to BCE shareholders, were it not for Telus's blunt explanation the next day.

“Telus today announced that it has elected not to submit an offer to acquire BCE as part of the strategic review process announced by BCE on April 17, 2007,” the company said in a statement. “The inadequacies of BCE's bid process did not make it possible for Telus to submit an offer.”

Telus was the only one of the four prospective bidders that failed to reach the finish line, where the winner proved to be Ontario Teachers' Pension Plan with an offer of $42.75 a share.

And yesterday, Telus made it official: The company confirmed that it will not try to get back in the game with a hostile bid before the Teachers deal to buy BCE closes.

For Mr. Entwistle, the chance to buy BCE is gone, and he is back at square one trying to find another way to turn Telus into an international player – before he finds himself in someone else's takeover plans.

Did Mr. Entwistle somehow play his cards wrong, missing a prime chance to cement his legacy and create a national telecom powerhouse? Or was the deck stacked against him?

Until recently, with the exception of idle daydreaming, Telus never devoted much time to plotting a takeover of its larger rival. Indeed, last fall, when Telus was preparing to convert into an income trust (a plan designed to boost the company's stock to enable acquisitions in the United States, and a plan that died when the government eliminated the structure's tax advantage), Mr. Entwistle told Report on Business Magazine that his management team didn't waste time on such “fanciful” notions, given the regulatory concerns that would dog a merger of Canada's two dominant telecoms.

The cellular business promised to be the main stumbling block. A combined BCE and Telus would have a stranglehold on many wireless markets, which might tempt regulators to order a sale of one of their mobility operations to maintain competition. The conundrum for Mr. Entwistle was that wireless is the most profitable and sought-after business in telecommunications. Selling off this prized asset, in other words, would undermine the very rationale for a deal.

Even when BCE was thrust into play on Friday, March 29, after a Globe and Mail report that private equity suitors were circling the company (which prompted BCE to issue a statement saying it was not in talks, and didn't intend to pursue any), Mr. Entwistle seemed unconvinced of his chances, and made a decision that underscored his doubts.

On March 30, the day after BCE said it wasn't in talks, Bob Dorrance, head of Toronto-Dominion Bank's investment-banking arm, called Mr. Entwistle with an awkward request, sources said. TD, Telus's long-time adviser and lender, had been asked to help the Ontario Teachers' Pension Plan with a secretly planned takeover of BCE, and the bank sought Mr. Entwistle's blessing.

The Telus chief, in Montreal for a “Full Monty” (a company term for routine meetings involving top officials), was taken aback, sources said. The ties between Telus and TD were deep and numerous. In addition to the financial relationship, Mr. Entwistle sat on TD's board of directors, while former TD boss Charlie Baillie was a Telus director.

Mr. Entwistle told Mr. Dorrance he was uncomfortable with TD advising Teachers if there was any chance an auction might erupt, giving Telus a chance to bid, according to two people briefed on the conversation.

Releasing TD to work with Teachers meant that if an auction did start, Telus wouldn't have his trusted advisers onside or access to TD loans.

The sources said Mr. Dorrance insisted he was under the impression that a Teachers takeover of BCE was imminent; moreover, the pension fund needed an answer from TD that afternoon.

Mr. Entwistle was befuddled, not least because of BCE's adamant stance that it wasn't interested in sales talks, the sources said. At the same time, he was in a conflicted position because of his role as a TD director: If he urged the bank not to take the assignment, he might deprive TD and its shareholders of hundreds of millions of dollars of fees.

Sources say Mr. Entwistle refused to grant any dispensation that day, and instead had several follow-up calls with Mr. Dorrance, who was attending the Juno awards in Saskatchewan. On Sunday night, convinced that a Teachers deal was all but done, Mr. Entwistle gave his blessing, but not before making his discomfort clear with several senior TD executives, said people familiar with the matter.

Senior officials at Telus and TD declined to be interviewed for this story, and a TD spokesman said the bank would not comment on matters involving clients. BCE and Teachers officials each privately disavowed that any deal was in the works.

And no deal came. For a week, there was no news, until April 9. That's when Teachers, BCE's largest shareholder, made a filing with U.S. regulators that signalled the pension plan wanted a sale, pushing BCE closer to an auction.

About a week later, on April 17, BCE announced it was beginning a formal sale process, and confirmed it had already begun negotiations with one party – not Teachers, as it turned out, but a rival consortium led by the Canada Pension Plan Investment Board and U.S. leveraged buyout titan Kohlberg Kravis Roberts & Co. Other parties would be invited to bid.

Mr. Entwistle and some members of the Telus board were infuriated, according to sources familiar with the matter. Telus was forced to look for financial advice outside the country, with all the big Canadian banks already committed to BCE or other suitors, and retained U.S. investment bank JPMorgan a few days later.

It was a less-than-graceful segue into the biggest auction of Mr. Entwistle's life, and a portent, some might later argue, of the coming negotiations with BCE.

For the remainder of April, at least to the outside world, Telus remained strangely quiet, while other prospective bidders, including Teachers and several U.S. private equity players, scoured the country for equity partners.

Finally, on May 3, with the CPP-KKR group still the sole confirmed bidder, BCE took the initiative. Michael Sabia, the company's CEO, placed a call to Mr. Entwistle, asking for a meeting. The two men agreed to confer on May 15, at the Wedgewood Hotel, a boutique hostelry in Vancouver.

For a pair of chary rivals, the meeting was surprisingly candid, according to people with knowledge of the discussion. On one side of the table was Mr. Entwistle, a hulking tinderbox of a man whose boyish looks are undercut by a perpetually etched scowl. Across from him, Mr. Sabia, a man of measured words and academic mien.

Mr. Entwistle began by stating his interest in a merger, and ticking off what he viewed as the benefits to both Canada and shareholders. The two discussed issues ranging from the need for non-disclosure agreements to the importance of studying the economic terms to who might lead the due diligence efforts.

One last thing was raised, though, that remains a point of critical contention between the two companies to this day. According to people familiar with Telus's version of events, Mr. Entwistle and Mr. Sabia agreed on the importance of going to Ottawa together early on in the process to determine whether the government would be inclined to bless such a merger, assuming this was the deal recommended by BCE directors. Officials at BCE dispute that any such agreement was made.

Either way, the two agreed to keep talking, and, after a follow-up phone call in which BCE expressed its desire to deal with the regulatory issues first, the CEOs met again at Toronto's Four Seasons Hotel on May 25, now just a month before bids would eventually be due. The CEOs each brought a pair of senior executives.

Sources said Mr. Entwistle unveiled a plan to win regulatory approval, with BCE and Telus jointly targeting four key Ottawa players, including Finance Minister Jim Flaherty and Industry Minister Maxime Bernier.

Again, there is a serious discrepancy about what was agreed upon. Telus believed it had BCE's support to move together to seek Ottawa's blessing, yet BCE officials once again reject that claim. One person briefed on the meeting said Mr. Entwistle wanted to approach the Prime Minister's Office in hopes of receiving expedited approval in 30 days, with no conditions attached – a view the source described as “naive.”

Both sides agree that the meeting ended with Mr. Sabia informing the Telus team they would have to submit an expression of interest to move ahead. Sources said Mr. Entwistle was irritated, because Telus would need to provide a preliminary price range and other information that the private equity bidders were not required to do before the final offers were due – all without having the opportunity to look at BCE's books first.

Three days later, on Monday, May 28, Mr. Entwistle relented, telling Mr. Sabia that Telus would submit an expression of interest in about a week's time, but stressed it was contingent upon a joint approach to Ottawa afterward. According to people with knowledge of the call, Mr. Sabia said he couldn't discuss regulatory strategy until after he received Telus's formal notice.

It was at this point, on the first day of June, that Mr. Entwistle first went to his board, and won permission to go ahead.

On June 6, a day after Teachers finally signed up as a bidder, joining CPP and a group led by Cerberus Capital Management in the auction, Telus mailed a sheaf of papers to BCE's strategic oversight committee giving a rough outline of how it planned to proceed.

Sources said Telus indicated a willingness to bid between $38 and $40 a share for BCE, whose stock had been hovering around $30 before news of a possible auction emerged, and highlighted many of the same points Mr. Entwistle and Mr. Sabia had discussed at their prior meetings. Telus also estimated that synergies between the two companies could be between $5 and $6 a share, with tax advantages adding an additional $8 to $10.

Yet cracks in the nascent negotiations were beginning to show, as word began to circulate that BCE was targeting a bid deadline of June 26: less than three weeks away.

On the weekend of June 9, BCE's financial advisers, led by Goldman Sachs, told Telus during a conference call that its bid range would not likely be enough to seal an acquisition, given that the company planned to pay with a combination of cash and its own shares (the private equity players were offering all-cash bids with little risk of regulatory interference).

The two sides also quarrelled over the amount of information Telus could access during its diligence; BCE argued the rules were different for Telus than for private equity firms, because it was a direct competitor, and insisted that under antitrust law there was strict protocol for sharing data. Sources said BCE also recoiled at Telus's suggestion that senior managers, like Mr. McFarlane, be given direct access to the data room of a competitor. Mr. McFarlane told Goldman that the deadline was untenable, according to people familiar with the discussion.

Mr. Entwistle, who was not on that call, phoned Mr. Sabia shortly afterward to ask why BCE seemed suddenly lukewarm on the prospect of going to Ottawa together, sources said. Mr. Sabia replied that to do so would give the appearance of favouritism, and possibly hurt the auction. Mr. Entwistle claimed it was merely part of the diligence process, so that the board could make an informed decision on the different bids, but the BCE chief was unmoved.

Mr. Entwistle was said to be furious at what he believed was an abrupt change of course on one of the more critical components of the Telus bid. Together with Brian Canfield, Telus's chairman, he delivered a letter outlining the company's concerns to the BCE board two days later, care of director Donna Soble Kaufman, who was in charge of the strategic committee.

Telus asked for more time to assemble its bid, and for an equal playing field in terms of accessing information (BCE officials, however, say Telus was dragging its feet on providing reciprocal information). Telus stressed in the letter its displeasure with what it viewed as BCE's about-face, and reiterated its view that visiting Ottawa together was justifiable as an act of due diligence.

“We agreed with your management team when we met on May 15th, and then again on May 25th, that we should go to Ottawa together as soon as possible to alert them to this alternative, and to present the merits of a combination,” stated a portion of the letter, obtained by The Globe and Mail. “It was based on those discussions that we were asked to submit a formal expression of interest, so that we could jointly approach the government. As agreed, we did submit such a letter on June 6th in good faith, and to then be told that Bell is now not prepared to approach Ottawa with us at this stage is very disappointing.”

Ms. Soble Kaufman replied immediately, and did not specifically address Telus's contention that BCE had reneged on a promise, although other BCE officials have flatly rejected that claim. She did write, however, that in the eyes of the strategic oversight committee, one of the biggest issues that must be addressed in any Telus bid is its vision for securing regulatory approval – something BCE sources insist Mr. Entwistle did not adequately do.

“To that end, we urge you to proceed forthwith in approaching Ottawa to assess the regulatory landscape,” she wrote, according to documents seen by The Globe and Mail. “As you suggest, we will pursue a separate track of discussions with Ottawa.”

This last sentence in the letter dated June 12 was particularly galling to Telus's executives and board, given that Telus had explicitly asked for a joint approach.

Ms. Soble Kaufman also suggested that Telus only “exchanged perspectives on a possible transaction” at the May 25 meeting at the Four Seasons, though Telus claimed it made its interest clear 10 days before, at the inaugural meeting in Vancouver.

“In our view,” she wrote in the letter, “Telus has chosen its timing throughout.”

In the Telus offices, this reply was met with disbelief, then outright anger, sources said.

Over the course of that week, the two sides appeared to be growing further apart on several other important issues. Although Telus had completed a short-form non-disclosure agreement, it was required to submit more information before it could view confidential BCE information.

The two sides were still arguing over Telus's ability to communicate with BCE directors, and over BCE's insistence that it would choose which of its Canadian advisory banks would be able to provide financing to Telus.

Mr. Entwistle was frustrated but forged ahead, driven by the previously unthinkable prospect of landing BCE.

Telus bowed to the conditions on June 18, but was not given access to the BCE data room until June 20 – the same day it publicly confirmed it was in merger talks and just six days before the bids were due. Telus advisers complained to BCE about the relative lack of information on several issues, including a lawsuit involving former subsidiary Teleglobe Inc., which it said it did not receive until the day before bids were due. BCE disputes that, too.

With only days to go, Telus received a formal purchase agreement asking for a $650-million break fee and a “hell or high water” provision requiring the company to stand by its bid regardless of whether Ottawa made the merged company spin off key wireless assets. Although Mr. Entwistle publicly voiced his confidence on June 21 that he would be able to meet the bid deadline, things had largely unravelled behind the scenes.

In a last-ditch effort on the night of Friday, June 22, Janet Yale, Telus's head of government relations, asked her counterpart at BCE, Lawson Hunter, what Telus needed to do to get the deal done.

Sources said Mr. Hunter told her he could not respond without first talking to BCE's advisers, and on Monday, June 25, a day before bids were due, Mr. Hunter and a BCE legal adviser told Ms. Yale that Telus should provide an estimate of which businesses would likely need to be sold to satisfy Ottawa.

Telus, naively or not, was working on the assumption it could win approval for the creation of a “Canadian champion” with little in the way of divestitures, given persistent fears that the country's head offices were disappearing.

But by this point, it hardly mattered. Within hours, as Telus' board meeting approached, Mr. Entwistle, along with his senior management and advisers, had decided to recommend that the company withdraw from the auction.

Gone was the strategic bidder, the bidder that some members of the BCE board considered likely to table the highest price. “Some directors thought Telus was the way to go,” said one BCE board member, speaking on condition of anonymity.

But extending the timeline to accommodate Telus wasn't an option, BCE argues, saying that the debt markets were already beginning to show signs of weakness in mid-June, and doing so might have threatened the chances of one or more bidders to secure financing. And, said one BCE official, Telus “could have picked up the phone on April 18,” one day after BCE announced its process, rather than waiting to be contacted in early May.

Once Telus was out of the formal auction, the company didn't give up, trying throughout July on its own to get a signal from Ottawa that a BCE deal would get a favourable regulatory treatment that would enable to Telus to keep as much of the coveted wireless business as possible. But again, Telus ran into timelines that just didn't work, as Ottawa couldn't promise the expedited review that the company wanted. On top of that, the debt markets had gone sour, as BCE feared they would, and Telus would have trouble finding competitive financing for the cash portion of any bid, which could have reached $18-billion.

Mr. Entwistle made his concession speech in a press release yesterday morning.

“After a thorough assessment of the opportunity and based on multiple factors, we are confirming today that Telus does not intend to submit a competing offer to acquire BCE,” he said.

The ramifications for Telus are clear: Mr. Entwistle's dream of creating a “national champion” that could buy U.S. companies to create a telecommunications giant, run from Canada, is gone. And unless Mr. Entwistle can find another way to raise his share price and be an acquirer, people close to him say he's well aware that Telus is likely to be the one acquired.