Ontario Teachers’ Pension Plan and partners including Providence Equity Partners Inc. agreed to buy BCE Inc., Canada’s biggest phone company, for $32.1 billion in the largest leveraged buyout.

The investment group, which also includes Madison Dearborn Partners LLC, will pay $42.75 Canadian a share in cash, Montreal-based BCE said Saturday. Teachers’, BCE’s biggest shareholder, trumped two competing bids. BCE shares last closed at $40.34 Canadian.

The deal places Canada’s most widely held stock in private hands for the first time in more than a century and may lead to more private equity forays in the country. Since taking over in April 2002, the chief executive officer of BCE, Michael Sabia, has sold a stake in CGI, Canada’s biggest computer-services company and reduced ownership in Bell Globemedia, which is now known as CTVglobemedia and is owner of the Globe and Mail newspaper. In December, he agreed to sell a satellite unit for $3.25 billion Canadian.

“The transaction delivers to our shareholders the real economic benefits of a lot of the work done over the last number of years,” Mr. Sabia, 53, said in a conference call with reporters.

Toronto-based Ontario Teachers’ offer is 42% higher than BCE’s share price on March 28, the day before the Globe and Mail first reported a potential sale.

Including the assumption of $16.9 billion Canadian in debt, preferred shares and minority interests, the deal is valued at $51.7 billion Canadian, topping February’s $43.2 billion buyout offer for Texas power producer TXU Corp. by Kohlberg Kravis Roberts & Co. and TPG Inc., formerly Texas Pacific Group. Financing for the deal is “fully committed,” the buyer group said. Excluding debt, the BCE sale is also bigger than the TXU deal.