Cyberworks in fresh bid for £2.3bn C&W
Richard Wachman, City editor
Sunday February 9, 2003
The Observer
Richard Li's Pacific Century Cyberworks, the Asian telecommunications group, is expected this week to table an indicative bid for Cable & Wireless, valuing the group at £2.3bn.
The Asians are understood to have received financial backing from US invest ment banking giant JP Morgan, as well as from venture capital group Texas Pacific.
PCCW's indicative offer of about £1 a share is designed to force C&W's new chairman, Richard Lapthorne, to open the company's books to PCCW, as well as to pave the way for negotiations which could lead to an agreed offer.
It emerged last week that Li's company had made a tentative approach to Lapthorne at the end of last year, but had been rebuffed.
C&W executives refused to allow Li to undertake due diligence, partly on the grounds that he gave no indication as to what PCCW was prepared to pay. By making an outline offer, Li hopes to persuade Lapthorne and C&W's share holders that he is serious about a takeover. One investor said on Friday: 'If PCCW can come up with an informal offer which talks about price, C&W's management really should agree to sit down and talk.' PCCW is being advised by Goldman Sachs.
Hong Kong-based PCCW wrote to C&W's board in early January reiterating that it was interested in discussing a cash takeover and could pay a substantial premium.
Hong Kong's dominant telecoms operator, PCCW acquired C&W's controlling stake in HK Telecom in 2000 when chief executive Graham Wallace decided to refocus his firm's activities on the internet, and telecommunications aimed at corporate customers. That strategy has failed and Wallace has agreed to step down.
PCCW will not make a hostile approach to C&W because it wants access to its figures before securing financing. At least three banks, including JP Morgan, are understood to have agreed in principle to finance any takeover.
Li is the son of Li Ka-shing, the Hong Kong billionaire businessman who owns industrial group Hutchison Whampoa.
A takeover would return to PCCW the 14 per cent of its own shares that C&W has held since 2000, when the purchase of HK Telecom was made for a mixture of cash and equity.
Guardian Unlimited © Guardian Newspapers Limited 2003
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