Hong Kong telephone operator PCCW confirmed on Wednesday night
that Australia's Macquarie Bank Ltd and private equity firm TPG
Newbridge from the US were in talks to buy PCCW's
telecommunications and media assets.
The announcement was made amid reports that an Australian
bank-led consortium could offer some HK$40 billion (US$5.14
billion) for the assets of PCCW, which is controlled by Richard Li,
the son of Asia's richest tycoon Li
Ka-shing.??
PCCW received "a non-binding expression of interest" from
Macquarie Bank Ltd on June 16 and TPG Newbridge expressed its
interest on June 20, according to the announcement.
"Both expressions of interest are indicative and preliminary in
nature, and the form that any possible transaction might take, and
the means and structure by which it might be implemented remain to
be discussed and determined," the announcement read.
PCCW did add, however, that reports appearing in the Hong Kong
press with estimates on the size of any deal were "inaccurate."
"The reports of estimated considerations of HK$40 billion and
HK$50 billion (US$6.43 billion) that appeared in the Hong Kong
press recently are inaccurate and speculative in nature."
PCCW said it would continue discussions with potential acquirers
"in the best interests of the company and its shareholders."
"It is not appropriate at this time to disclose the proposed
consideration in the absence of detailed terms of any transaction,
which have yet to be formulated."
However, PCCW said the company would need to obtain the consent
of China Network Communications Group Corporation (China Netcom),
which holds 20 percent of PCCW's shares, if the company were to
seek to dispose of more than 10 percent of its voting rights and
subsidiaries.
At the request of the company, trading in PCCW shares on the
Stock Exchange was suspended with effect from 9:30 AM (0130 GMT) on
June 21 pending the release of the announcement, and the company
has applied to resume trading with effect from 9:30 AM (0130 GMT)
today.
Analysts said the possible transactions between PCCW and
acquirers could face potential objections on security and
nationalist grounds from Beijing. Concerns will arise if the
company really intends to sell its key telecoms assets to a foreign
entity.
State-owned China Netcom bought 20 percent of PCCW last year for
US$1 billion in a deal intended to lead to a series of cooperative
ventures and, in part, a pre-emptive strategic tie-up such as
this.
China Netcom said in a statement late on Tuesday that it did not
want to see any changes at PCCW and would look closely at any
proposed acquisition of PCCW's assets "to ensure shareholder rights
are well protected."
"We do not want to see any changes in PCCW, which is owned and
managed by Hong Kong people, nor any changes in its key
assets."
(Xinhua News Agency June 22, 2006)