PCCW formally rejects asset bids

26 Jul 2006

Hong Kong telecoms and media group PCCW yesterday formally rejected offers from Australia’s Macquarie Group and US-owned TPG Newbridge for its core assets, citing opposition to a potential deal from its 20% stake holder China Netcom. ‘The board has determined not to pursue either non-binding expression of interest any further,’ PCCW said, reiterating that China Netcom had ‘repeatedly indicated its opposition to such an asset sale.’

On 10 July 2006 PCCW’s chairman Richard Li agreed to sell most of his controlling interest to Hong Kong-based financier Francis Leung for HKD9.17 billion (USD1.18 billion). Under the agreement Li’s 75%-owned company PCRD’s entire 22.7% stake will be transferred to Leung’s wholly owned private equity firm Fiorlatte by the end of November 2006. Li regretted that the equity sale valued the company at HKD40.4 billion (USD5.2 billion), much lower than Newbridge and Macquarie’s offers, reported to be as high as HKD60 billion, but said that the difficulties in pushing through an asset sale had forced his hand. However, people close to the situation said that they expected overseas interest in the company to be rekindled once control of PCCW changed hands.