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Huawei puts mobile sale plans on hold

09 октября 2008

Global financial turmoil has forced Huawei, the Chinese telecommunications equipment maker, to shelve plans to sell control of a business unit to a foreign investor.

Asia had been regarded as a bright spot for mergers and acquisitions but bankers said that Huawei’s decision underscored the difficulty of sealing deals in the region amid volatile markets and that several big proposed outbound deals by Asian groups were on hold.

Huawei had hired Morgan Stanley to find a strategic partner to buy a majority stake in its mobile devices unit in a deal that had been expected to raise $2bn for the Shenzhen-based group.

Several shortlisted bidders have abandoned their interest amid rising credit costs and declining growth prospects for the world economy.

Bain Capital and Silver Lake, the US private equity firms, were the only groups to table bids, although people close to the matter said the offers were about 25 per cent less than Huawei wanted.

Huawei on Wednesday said it had postponed the sale given “current global market conditions and prevailing economic uncertainty” but might resume it in future.

But one person involved in the sale process said: “It is difficult to see how Huawei can easily reopen this. The credit markets are not going to change overnight.”

The collapse of the sale will disappoint private equity firms operating in Asia as it was one of the few opportunities to deploy a significant amount of funds in one transaction.

The spotlight will turn to PCCW, the Hong Kong fixed-line telecoms operator chaired by Richard Li. It is also nearing the end of a lengthy process to find a strategic partner.

In May, the group published plans to fold most of its core fixed-line, broadband and television assets into a separate holding group and sell up to 45 per cent of the newly formed vehicle to investors, a deal expected to fetch up to $2.5bn. It hired UBS to advise on the sale.

About half a dozen private equity groups including Bain, TPG, Providence, Macquarie and MBK were shortlisted for the second round. Final bids are due this Friday.

Shares in PCCW have fallen, partly over fears that turmoil could affect the sale and the price.

People familiar with the thinking of some of the potential bidders said it was increasingly difficult to value the PCCW stake.

Источник: Financial Times

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