What is the deal here?
Many moons ago, Mr Richard Li, son of Mr Li Ka-shing, presented his intention to sell the 22.64% stake in PCCW, a telco listed in Hong Kong.
There were suitors with big monies but they were turned down. Why? It was rumoured that IT does not favour strategic assets such as telcos to go under control of foreign owners.
Then some recent months ago, I read that Mr Richard Li has agreed to sell the stake in PCCW to financier, Mr Francis Leung.
The 22.64% stake is held under Pacific Century Regional Developments (PCRD), a company listed in Singapore.
Why and how would a financier want to own a telco with a price tag in the billions?
On 14 Nov 2006, Business Times reported that the 22.6% will be taken as follows
- 12% by 2 charitable foundations of the elder Li,
- 8% by Spanish telecoms giant Telefonica and;
- the remaining 2.64% goes to (guess who?) Mr Francis Leung.
Given the line-up, has the answer presented itself? It doesn't look that Mr Leung is the intended ultimate buyer.
What will be interesting in days to come?
The sale is conditional upon approval from shareholders of PCRD. As Mr Li is a substantial shareholder of PCRD, the approval would be a simple technicality to be executed until the Singapore Exchange (SGX) enters into the story.
SGX banned the younger Li from voting on the sale of his stake after it was unable to get assurances that parties connected to him - including his father - were not involved in the sale.
A significant part of the deal's future now lies in the hand of minority shareholders of PCRD as they convene for an EOGM on 30 Nov 2006.
Conclusion
Why must Mr Richard Li sell PCCW? Is PCCW no good and will thus hurt PCRD in future? Then how come got suitors ha? How come got to get daddy involved if it is no good? So PCCW must be good. Then why sell? But daddy already got its own telco business in Hutchison Whampoa.
Can someone explain to me for my academic understanding, please? Good nite.
P/S - I am not a shareholder of PCRD and PCCW.