PCCW Says It Was Shunned in Takeover Bid
Feb. 07, 2003
HONG KONG (AP) _ Telecommunications group PCCW Ltd., which saw its shares collapse after the controversial takeover of the Hong Kong operations of Britain's Cable & Wireless PLC, said Friday it recently proposed buying the whole company but was rebuffed.
PCCW, which is run by tycoon Richard Li, a son of Hong Kong's richest man, Li Ka-shing, said it had not decided whether to pursue the matter further.
Analysts were baffled by PCCW's overture to Cable & Wireless and questioned how the Hong Kong phone carrier, laden with $4.2 billion in debt, could finance a takeover. Both companies are in the midst of restructuring following the collapse of the dot-com boom.
``An offer will worry investors in PCCW, which is supposedly bringing down its debt levels,'' said KGI analyst Ben Kwong.
PCCW, originally launched as a dot-com venture, stunned many with its $28.5 billion acquisition three years ago of Cable & Wireless HKT, Hong Kong's dominant telecom carrier. Cable & Wireless still has a 14 percent stake in PCCW.
Following the Internet slump, PCCW now relies heavily on phone revenues but faces intensifying competition because the market is being fully liberalized this year.
In a press release, PCCW said it sent a letter to Cable & Wireless in late December proposing discussions of a possible cash takeover offer. Reports said the offer was worth 2.4 billion British pounds ($3.9 billion).
The approach was rejected by Cable & Wireless in a letter dated Jan. 27, PCCW said.
PCCW shares fell 1.65 percent Friday on the Hong Kong Stock Exchange. Its U.S. shares fell 12 cents to close Friday at $7.55 on the New York Stock Exchange.