Minority shareholders of Singapore-listed Pacific Century Regional Developments (PCRD), in which PCCW chairman Richard Li holds his controlling shares, today vetoed a USD1.17 billion deal to buy Li’s 23% stake in the telco. Hong Kong financier Francis Leung, who had led the consortium to buy a controlling interest in Hong Kong’s principal telco, said that the move ‘marks the end’ of the sale, whilst maintaining that the deal was ‘fair…reasonable…confirmed by independent financial advisers to be on normal commercial terms and not prejudicial to minority shareholders’. Leung added that, while he respected the shareholders’ decision, he blamed media reports about the nature of the transaction for leading to its collapse: ‘It is perhaps unfortunate that certain recent media reports and speculation have caused confusion amongst minority shareholders as to the rationale and overwhelming benefits of the transaction’. The consortium led by Leung includes Li’s father, Asia’s richest man Li Ka-shing, and Spanish telecom giant Telefónica. The sale was opposed by 76.3% of the votes cast by shareholders. Richard Li, who controls 75% of PCRD’s shares, was barred from participating because of the presence of his father in the bidding line-up.
The planned sale of a stake in PCCW has sparked wide interest in the media, the public as well as the financial and political community. Two foreign investors – Australia’s Macquarie Bank and US-based Texas Pacific Group – had offers estimated to be worth up to USD7 billion rejected earlier this year after the Hong Kong incumbent’s second-largest shareholder China Netcom, backed by Beijing, opposed the move on the grounds that strategic telecoms assets should not be controlled by foreign investors. This led to much debate on the interference of the mainland in the Special Administrative Region’s business affairs. Further media attention centred on Richard Li’s father, whose involvement in the deal apparently angered his son into telling a local newspaper last week that he would prefer the takeover to be vetoed. The Financial Times today quotes a PCRD shareholder as saying: ‘The sale price of PCCW was undervalued…We should hold on and see if we get a better price later.’