Shaw Sells Stake in Hong Kong's TVB, Ending Speculation of Takeover Fight

Television Broadcasts Ltd. co- founder Run Run Shaw is selling most of his stake in Hong Kong’s biggest TV company to investors, putting an end to speculation of a takeover battle. The shares fell.

Shaw Brothers (Hong Kong) Ltd., owned by the 103-year old Shaw, will dispose of its 26 percent holding to ITC Corp. Chairman Charles Chan, Cher Wang and Providence Equity Partners, TVB said yesterday. Shaw’s foundation will also sell its 6.23 percent interest to independent third parties, the company known as TVB said, without giving price details.

Shaw set up TVB, now Hong Kong’s dominant free-to-air broadcaster, in 1967 after a filmmaking career that started in 1920s Shanghai. Speculation that Shaw will get competing bids from investors including Shanghai Media Group and Lee Ka-kit, vice chairman of Henderson Land Development Co., sent the stock to the highest level in more than three months on Jan. 10.

“Investors were expecting there would be a fierce fight among several TVB buyers,” said Castor Pang, Hong Kong-based research director at Cinda International Holdings Ltd. “But now the transaction was settled without much drama, the stock’s premium that resulted from the speculation has gone.”

TVB fell 2.9 percent to close at HK$44.55 in Hong Kong trading today, after declining as much as 8.5 percent earlier. ITC, an investment company, rose 15 percent, after gaining as much as 26 percent earlier.

Sold for Less

DBS Vickers analyst Mavis Hui cut her recommendation for TVB to “hold” from “buy.” The 26 percent stake was sold for HK$8 billion ($1 billion), less than the HK$9.2 billion that Henderson Land’s Lee had offered, the Standard newspaper reported today, citing unidentified people.

“TVB will become more aggressive in providing content to Chinese TV channels and general new revenue streams” should the new investors keep their stakes, Spencer Leung and Erica Poon, analysts at UBS AG in Hong Kong, said in a report today. “We believe the company will drive earnings growth via its strong operating leverage.” They have a “buy” recommendation with a target price of HK$58 a share.

Wang is chairwoman of Taiwan-listed HTC Corp., the world’s biggest maker of handsets using Google Inc.’s Android software. Chief Executive Officer Peter Chou didn’t answer calls to his office today.

Advertising Sales

TVB accounted for more than 80 percent of Hong Kong’s free- to-air television market by advertising sales in 2009, according to consultants Media Partners Asia. It’s also one of the world’s biggest producers of Chinese-language programming, distributing shows in more than 30 countries, according to its website.

“The directions for programs and market strategic development will remain unchanged,” Stephen Chan, general manager of TVB, said in comments broadcast by Cable TV today.

Shaw Brothers is expected to complete the sale of the TVB shares by March 31, according to the statement filed to the Hong Kong exchange yesterday. The prospective investors’ combined interest will be less than 30 percent, it said. Buying a stake of more than 30 percent would trigger a mandatory buyout offer under Hong Kong rules.

Shaw, knighted by Britain’s Queen Elizabeth II in 1977, is the biggest shareholder in TVB with a 32.5 percent stake, according to TVB’s interim report in August.

To contact the reporters on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net; Sophie Leung in Hong Kong at sleung59@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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