Francis Leung, the Hong Kong-based deal-maker, has agreed to pay HK$9.1 billion ($1.18 billion; €925 million) for Richard Li’s 22.7 percent controlling stake in PCCW, the Hong Kong listed telecommunications group.
Leung’s intervention effectively ends the battle for PCCW’s core telecom assets, which international private equity investors Macquarie Bank and TPG Newbridge had been competing to buy.
PCCW has indicated that it would continue talks with Macquarie and Newbridge on the disposal of some if its assets. However, the sponsors’ original plans to acquire PCCW’s core telecommunications and media assets appear no longer feasible.
Any asset sale will depend on the receptiveness of China Netcom, PCCW’s second largest shareholder. State-owned China Netcom had previously stated that it did not wish to see changes to PCCW’s Hong Kong ownership. The Chinese government is known to hold similar views.
Richard Li, who has been actively looking for a buyer for his interest in PCCW, was quoted as saying: “[The deal] may not be as good as a successful asset sale, but the circumstances dictate that we cannot have an asset sale. So the best I can do is to entertain the local consortium, which meets the concerns of Netcom and the company.”
Leung has indicated his interest in working with China Netcom. “The opportunity for PCCW to develop its partnership with China Netcom presents many exciting possibilities,” he said in the statement.