The one-month bidding war surrounding Hong Kong's largest phone operator came
to an end Monday after its controlling shareholder Richard Li sold a 23-per-cent
stake to a high-profile local banker.
PCCW Ltd. chairman Richard Li speaks to the
media after a board meeting in Hong Kong, July 10, 2006. Li said on Monday
that his Singapore-listed Pacific Century Regional Developments was
selling its 23 percent stake in PCCW for HK$6.00 a share to local
financier Francis Leung. [Reuters]
The mega-deal, worth HK$9.16 billion (US$1.17 billion), valued PCCW at HK$6
(77 US cents) per share, an 8 per cent premium to its closing price of HK$5.55
(71 cents) on Friday.
Li retains a 3 per cent stake in the firm, in which China Netcom Group Corp,
the mainland's second-largest fixed-line operator, spent US$1 billion last year
for a 20-per-cent stake.
Francis Leung, who stepped down this year as chairman of Citigroup's Asia
investment banking arm, beat two overseas rivals Australia's Macquarie Bank and
the Asian arm of US buyout firm Texas Pacific Group.
The two had previously offered US$7.3 billion and US$7.55 billion for the
main phone and media assets of PCCW.
Dubbed "Godfather of Red Chips", Leung is credited with arranging the Hong
Kong listing of some big mainland in the 1990s. Red chips are Hong Kong-listed
mainland companies with at least a 20-per-cent stake held by the State or
PCCW "has a unique position in Hong Kong's infrastructure network," Leung
said at a press conference last night. "This is a long-term investment."
Analysts said it's a wise move for Li to exit the telecom sector, which is
highly competitive and delivers slim profits.
"I think he made the right decision," said Andes Cheng, an analyst with Hong
Kong's South China Brokerage Co Ltd.
he would team up with China Netcom to explore the mainland market. When he was
with Citigroup in 2004, Leung handled the listing of China Netcom Group's Hong
Hong Kong financier Francis Leung speaks
during a news conference in Hong Kong July 10, 2006. Leung announced on
Monday a bid for the controlling stake in phone company PCCW Ltd., held by
Li's younger son Richard. [Reuters]
Li said he would personally earmark HK$1.38 billion (US$177 million) to
minority PCCW shareholders as special dividend, translating into HK$0.33-HK$0.38
(4.2-4.9 US cents) per share, a move analysts said would be part of the reason
why PCCW shares would rise after they resume trading today.
"It's not the 100 per cent outcome that I had hoped for, but this is the best
we can do," Li told a press briefing. He declined to take questions.
PCCW shares increased about 10 per cent till Friday after Macquarie Bank's
offer was made public on June 20. Texas Pacific joined the bid a few days later.
Opposition to Texas Pacific and Macquarie, Australia's largest investment
bank, highlights China's sensitivity towards overseas ownership of industries
the government views as strategic, said some analysts.
"Communication is considered a very strategic asset," said Francis Lun,
general manager at Fulbright Securities Ltd.