PCCW Will Stay Under Chinese Control

Brian Bremner

If you need more evidence that Beijing is pulling the welcome mat on foreign companies trying to buy Chinese corporate assets, consider the outcome of the bidding war for PCCW, the Hong Kong based fixed line, Internet and pay-tv company. PCCW Chairman Richard Li, the son of Hong Kong billionaire Li Ka-shing, is selling his controlling 22.7% stake in the company to Hong Kong investment banker Francis Leung. And that is sweet news for mainland-based China Network Communications, a state-owned company and major PCCW shareholder which had objected to the Hong Kong telecom falling into foreign hands.

Since mid-June, PCCW had been at the center of a two-way bidding contest between the Australia’s acquisitive Macquarie Bank and private equity powerhouse Texas Pacific Group. The sale to Leung, the former Asia Chairman for Citigroup, effectively ends that contest. Meanwhile, dealmaker Richard Li, who engineered the 2000 acquisition of Hong Kong's biggest telecom operator, Hong Kong Telecom, from Britain's Cable&Wireless for $28 billion, is walking a way a very wealthy man.

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