Macquarie, TPG-Newbridge in PCCW bidding war

A consortium led Macquarie Bank is vying with US private equity firm TPG-Newbridge to acquire the telecommunications and media assets of Hong Kong-listed PCCW in what could be a deal worth over $7 billion.

Australia’s Macquarie Bank and TPG-Newbridge are targeting the telecommunications and media assets of Hong Kong-listed PCCW, a company controlled by Richard Li, the son of Hong Kong tycoon Li Ka-shin.

PCCW has received non-binding expressions of interest from Macquarie and TPG-Newbrige in a “possible acquisition of substantially all the telecommunications and media assets of the company,” according to a statement.

Macquarie was first to indicate its interest, followed by TPG-Newbridge’s expression of interest on June 20, PCCW said in the statement.

Macquarie will not comment beyond a statement in which it says “discussions are at a very early stage and it is far too early to predict whether they will result in a transaction”.

In January, TPG-Newbridge made an offer for a 25 percent stake in Li’s Singapore-listed Pacific Century Regional Development (PCRD), the holding company through which Li controls PCCW. The $146 million offer has been described in Hong Kong newspaper The Standard as having received “the cold shoulder from PCRD’s shareholders”. A vote in Singapore scheduled for June 19, prior to which shareholders were advised to accept the TPG-Newbridge offer, was postponed in the wake of Macquarie’s move.

According to reports citing unnamed sources familiar with the deal, TPG-Newbridge has offered to pay HK$60 billion ($7.7 billion) in cash for the assets, outbidding the $57 billion ($7.3 billion) in cash and shares proposed by Macquarie.

Whether a transaction will come to pass depends in no small part on China Netcom, the telecoms group with a 20 percent interest in PCCW. China Netcom has already voiced its opposition, and fired a statement earlier in the week saying it was “not willing to see any changes to the Hong Kong ownership of PCCW or its assets.” The Chinese group bought its stake in PCCW last year for $1 billion.