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$1.9bn plan to take PCCW private

05 ноября 2008

Richard Li and his Chinese state-owned partner have offered to take the tycoon’s Hong Kong telecommunications company private, in a cash deal worth US$1.9bn.

Mr Li and China Unicom will offer minority shareholders in PCCW, Hong Kong’s largest telecommunications company, HK$4.20 a share. The price represents a 53 per cent premium to PCCW’s last close – a record low of HK$2.75 – reached before they were suspended from trading on October 14.

Mr Li and his Singapore-listed holding company, Pacific Century Regional Developments, control 28 per cent of PCCW, while China Unicom is the company’s second-largest shareholder with a 19.9 per cent stake.

Their offer values PCCW at US$3.6bn – a far cry from the US$28.5bn PCCW paid to acquire Hong Kong’s telecom incumbent from Cable & Wireless eight years ago. In 2006, foreign bidders were prepared to pay about US$7bn for PCCW’s core telecom and broadband assets before the Chinese government vetoed the sale on nationalist grounds.

“PCRD and [China Unicom] have worked together to present a serious offer in a difficult market,” a PCRD spokesperson said. “HK$4.20 cash offers a significant premium . . . In this environment, we believe that shareholders will value the opportunity for liquidity presented by this offer.”

“This is a company that has had a turbulent trading history,” added another source close to the transaction. “It’s very volatile. It doesn’t go up when the market goes up, but it does go down when the market goes down. What this offer does give is a total exit for shareholders.”

However, Mr Li and China Unicom’s offer is below the HK$4.85 average around which PCCW’s shares have traded for the past four years. This could fuel concerns that the two parties are trying to snap up an undervalued asset on the cheap.

“Anything above HK$4.65 is good for shareholders,” said one analyst before details of the offer were announced. “The company is not really worth that much given its limited geographical exposure – mainly Hong Kong – and the global economic situation.”

The offer could also annoy private equity bidders, who were invited earlier this year to tender for a 45 per cent stake in PCCW’s core telecom and broadband assets.

PCCW terminated the auction on October 13, saying the bids received were not attractive enough. In the weeks preceding that decision, PCCW’s shares crashed more than 40 per cent to their current level.

Источник: Financial Times

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