PCCW bidding war beckons

A second potential bidder has joined Australia’s Macquarie Bank in preparing an offer for Hong Kong’s largest telco PCCW’s core telecoms and media assets, according to local press reports. Newbridge Capital, an arm of US equity house Texas Pacific, is reportedly considering offering as much as HKD50 billion (USD6.44 billion) for businesses including PCCW’s fixed line operations, its NOW broadband TV service, and its mobile subsidiary Sunday Communications. The move was not wholly unexpected, as Newbridge made an earlier offer to acquire an indirect stake in PCCW. Macquarie Bank has confirmed that it is in negotiations with PCCW, but added that the talks were ‘at a very early stage and it is far too early to predict whether they will result in a transaction.’ PCCW said yesterday that reports that Macquarie Bank had already offered HKD40 billion (USD5.15 billion) were ‘inaccurate and speculative in nature.’ The company, whose biggest shareholder is its chairman Richard Li, has a market capitalisation of HKD35 billion. Meanwhile, PCCW’s 20%-stakeholder, China Netcom, expressed dissatisfaction with the takeover talks, saying it wanted the company to remain intact, and analysts pointed out that the deal could run into political and regulatory hurdles, due to concerns about the sale of national communications infrastructure to an overseas buyer.