Pacific Century CyberWorks Wins Bidding War for C&W HKT
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PCCW reached a deal giving it a 54 percent share of HKT from Britain's Cable & Wireless plc (C&W). In exchange, Cable & Wireless Far East (C&W FE), which also holds a stake in HKT, will recieve a 11.2 to 20.9 percent stake in PCCW. Investors will have a choice between a cash-and-stock and an all-stock consideration.
Singapore Telecommunications Ltd (SingTel), which had also been involved in the bidding process, withdrew its bid Tuesday morning. Rupert Murdoch's News Corp., had reportedly added financial weight on Monday with a belated US$1 billion injection to assist the SingTel bid.
Lee Hsien Yang, president and chief executive officer of SingTel, showed disappointment on the release of this announcement, but gave no specific reason for his firm's abandonment of its bid. Yang added that SingTel will continue to explore growth opportunities, including strategic alliances and joint ventures, with like-minded partners in Asia.
C&W will become the second majority shareholder with less than 20 percent of company shares. Other shareholders include Intel Semiconductor Ltd, China Telecommunications Ltd and CMGI.
Under the terms of the deal, CMGI will also receive $500 million in newly issued PCCW shares, for which it will offer C&W $500 million in CMGI stock. PCCW and CMGI have already swapped stock twice, with the latest exchange valued at $350 million.
"The acquisition of Cable & Wireless HKT represents a historic milestone for Richard Li and his company, and only reinforces what I've believed since I first met Richard last year -- no other company is better positioned than PCCW to capitalize on the Asian Internet opportunity," said David Wetherell, CMGI chairman and CEO.
"This announcement is a further significant step in the transformation of Cable & Wireless," Graham M. Wallace, Chief Executive of Cable & Wireless. "Our strategy for future growth is to focus on delivering data and Internet Protocol (IP) based services to business customers in the world's major markets -- the U.S., Europe and Japan."
Wallace indicated that the company believes these strategies hold greater value for C&W's shareholders. He added that the unit fits better into PCCW's core business, with its focus on consumer broadband Internet services in Asia. C&W and PCCW may work together on IP infrastructure projects in the future, Wallace added.