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Technology Stocks : Pacific Century CyberWorks (PCW, PCWKF) -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (512)	2/29/2000 11:54:00 PM
From: CJ	Respond to of 4541

Gd Article Today: HKS:"The acquisition has compelling logic" TIGERNET Wednesday 01 March 2000 Business - Front Page PCCW edges out SingTel for HKT By staff reporters CAPTION: `The acquisition has compelling logic' STORY: PACIFIC Century Cyberworks (PCCW) scored a coup yesterday with the news that it has edged out deep pocketed Singapore Telecom and is buying Cable & Wireless HKT (HKT) in a deal worth up to $296.3 billion (US$38.1 billion). PCCW, which one year ago was a small and relatively unknown bit player in the telecommunications sector, has gained a huge profile since being selected as the backdoor listing vehicle for the technology arm of the Pacific Century group controlled by Richard Li, son of Hong Kong magnate Li Ka-shing. It said HKT's 54 per cent parent, British-based Cable & Wireless accepted its offer for HKT, which is Hong Kong's dominant telecom player although its market share has been eroded in recent years with deregulation of its core markets. It said in a 37-page document that it is offering a cash and share offer for HKT or an all share offer. It said the mixture of cash and shares was worth $279.6 billion (US$35.9 billion), while the all-share offer was worth $296.3 billion (US$38.1 billion). HKT shareholders will be offered 1.10 new PCCW shares for each C&W HKT share under the all share offer, or 0.7116 new PCCW shares and and US$0.929 in cash per C&W HKT share. ``The PCCW board believes that the acquisition has compelling logic, and is in the best interests of the shareholders of both HKT and PCCW,' it said in a statement. While the offer does not include much in the way of cash, analysts said the market was not banking on a large cash component in any offer by PCCW. Formerly known as Tricom Holdings, the company's share price rocketed more than 1200 per cent in one trading day in early May last year on the strength of the backdoor listing, and has risen more than 3000 per cent since its Tricom days, despite some substantial share placements which diluted its value. But while it is worth almost US$30 billion on paper based on its share price, it is cash poor compared both to its takeover target and the target's parent, and the offer reflects the offer. ``There is not a whole lot of cash. The cash portion is about one third and two thirds of the offer is in shares,' said Alan Hutcheson, research director of Pacific Challenge Securities. Analysts said investors could well dump HKT shares when trading resumes today. Shares of its parent dived more than seven per cent at one point overnight in London, although PCCW is expected to fare better today. ``There shouldn't be much initial impact on PCCW's share price, because it is a big deal and there are a lot of variables in the long-term restructuring of the merged company,' G K Goh research vice president Adrian Au said. Analysts said banks' willingness to join a US$10 billion syndication to help fund the merger indicated establishment support for a local buyer of HKT. Bank of China unit BOCI Capital is helping lead the syndication for PCCW, local debt market newsletter basis point reported last week. Also Liu Jinbao, Bank of China's chief executive, Hong Kong and Macau Regional Office, said the merger would benefit Hong Kong. ``The PCCW facility is a special case to Hong Kong. It will promote hi-tech industry in Hong Kong. PCCW's bid for C&W HKT will also help break the telecommunications monopoly in Hong Kong,' Mr Liu said. While Mr Liu said tycoon Li Ka-shing, the father of Richard Li, had personally encouraged the Bank of China to help PCCW in the syndicate, a spokesman for Li Ka-shing said Richard Li and PCCW were capable of convincing banks to fund the deal on their own merits. PCCW's coup drew cautious praise from Liu Chun-wah, assistant professor of department of Economics at Chinese University of Hong Kong. HKT would fit better with PCCW than with Cable & Wireless. ``It would be very difficult for HKT to adapt to the new Asian telecoms market if it was still under C&W which focuses on Europe,' said Mr Liu. However, Mr Liu expressed concern that Richard Li's success might encourage him to take bigger risks. PCCW-HKT would be Hong Kong's third largest company, and any mistakes would hurt both the stock market and Hong Kong. Kwong Kai-sun, assistant professor of department of Economics at the Chinese University of Hong Kong said he was worried that the PCCW-HKT would further concentrate telecom control in the Hong Kong market because of the links between Richard Li and his father, whose empire includes a telecom operation in the territory. Copyright(c) 2000 Hong Kong Standard Newspapers Ltd. All rights reserved. Reproduction In Whole Or In Part Without Express Permission is Prohibited. . online.hkstandard.com