PCCW Proposes Take-Private Deal

Shares in PCCW surged HK$0.78, or 26.9%, to HK$3.68 after largest shareholder Richard Li unveiled plans to take the Hong Kong telecom company private with the backing of Chinese state telecom China Netcom, which has a 19.9% holding. At present the duo own 47.9% of PCCW’s shares.

However, that left PCCW below the cash offer price of HK$4.20 a share. This means Li and Netcom will have to fork out HK$15.5bn (US$2bn) to take full control of the the company. The deal is expected to complete next March.

The offer price represents a healthy 53% premium to PCCW’s undisturbed share price but analysts believe gaining minority shareholder approval could be problematic.

It is below the stock’s 52-week high of HK$5.21, driven higher by hopes of a private equity purchase of the company, which was cancelled on October 13.

Source: Thomson Merger News