Pacific Century CyberWorks (PCCW) has agreed a 35.9 million merger with Cable & Wireless HKT, in what is said to be the biggest ever takeover in Asia. PCCW offered $38.1 billion in shares or $35.9 billion in cash and shares for Cable & Wireless HKT, one of Hong Kong's most prestigious companies.
According to the PCCW board, the acquisition has compelling logic. As a result of the deal, shareholders of HKT will obtain a stake in one of Asia's most sophisticated convergent broadband delivery networks. PCCW Group managing director Alex Arena said that the merger would create a new Asian Internet, telecoms and multimedia giant with a market capitalisation of US$70-80 billion.
C&W HKT brings with it revenues of HK$32.41 billion (US$4.17 billion) and profits of HK$11.51 billion (US$1.48 billion) in its last fiscal year.
PCCW was founded by chairman Richard Li, the 33-year-old son of Hong Kong's best known tycoon, Li Ka-shing, who said that the merger would strengthen the company’s position, creating more scope for its services and accelerating its roll-out throughout Asia.
Cable & Wireless, a 54 per cent shareholder, outbid Singapore Telecom, the government-controlled phone company. SingTel's president, Lee Hsien Yang, said that after more than a month of negotiations, the group was disappointed with the decision, but it was confident of continued success and would seek further alliances in Asia.
HKT claims to be a pioneer in a wide range of communications solutions, launching the world's first fully digitised urban network, the world's first fibre-optic cable linking China, and the world's first interactive television services. The company won the Financial Times ‘Most Competitive Local or National Carrier’ award last year, and was also named as the number one company in Asia based on wealth creation.