PCCW, the telecommunications group controlled by Hong Kong tycoon Richard Li, is in advanced talks to sell a significant minority stake in its fibre business to China Merchants Group, according to sources familiar with the matter.
PCCW is close to selling 40 per cent of its fibre unit to the Chinese state-owned conglomerate for US$850 million to US$900 million, the sources said, asking not to be identified because the discussions are private. PCCW and China Merchants are finalising details and an announcement could be made as soon as the coming weeks, the sources said.
Financing has been lined up for the deal, which may be done via private equity unit China Merchants Capital, the sources said. The stake sale would help PCCW raise cash and expand the fibre business, they said.
PCCW’s American Depositary Receipts rose as much as 5.3 per cent following the Bloomberg News report on the possible sale, the biggest jump since Mar 5. PCCW’s Hong Kong-listed shares rose as much as 1.8 per cent when trading began on Wednesday (May 8), also the biggest gain in two months. The Hang Seng Index was little changed.
Talks are ongoing and could still face delays or collapse, the sources said.
A representative for PCCW declined to comment. China Merchants Capital did not respond to a request for comment.
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China Merchants has been considering bidding for a stake in the fibre business after talks between PCCW and Abu Dhabi’s sovereign wealth fund for the assets fell apart, Bloomberg News reported in March.
China Merchants traces its roots back to 1872 and has businesses ranging from ports, transport and finance to property and health care. BLOOMBERG
