P.C.C.W. - C&W: Deal abgeschlossen - 500 Beiträge pro Seite

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17:29 29-FEB-2000
WRAPUP-Pac Century wins merger battle for
C&W HKT

(Adds terms of deal) By David Lawder HONG KONG,
Feb 29 (Reuters) - Pacific Century CyberWorks Ltd
<1186.HK> moved from Internet pipe dream to telecom
powerhouse on Tuesday, clinching a $35.9 billion cash and stock merger with Cable &
Wireless HKT that defeated rival bidder Singapore Telecom .

The Internet startup has offered US$38 billion in shares or US$35.9 billion in cash and
shares for Cable & Wireless HKT in what would be the biggest ever takeover in Asia, a
source close to the deal said. PCCW Group Managing Director Alex Arena told reporters
the 100 percent merger would create a new Asian Internet, telecoms and multimedia giant
with a market capitalisation of US$70-80 billion.

The deal puts the future of one of Hong Kong`s oldest and largest companies in the hands
of a brash startup founded by Richard Li, the 33-year-old son of Hong Kong`s best known
tycoon, Li Ka-shing, rather than with Singapore`s cash-rich government-controlled phone
company.

PCCW, less than a year old, intends to confirm the transaction price and terms later on
Tuesday.

The source close to the deal said Cable & Wireless Plc , which owns 54 percent of C&W
HKT, will own between 11 percent and just under 21 percent of the new entity, to be
called Pacific Century CyberWorks-Hongkong Telecom (PCCW-HKT).

UK COMPANY TO OWN UP TO 21 PCT OF PCCW C&W HKT shareholders will
be able to choose whether to swap their shares for PCCW stock only or for a combination
of PCCW shares and cash, Arena said, adding that Cable & Wireless`s final stake would
be determined by shareholders` decisions.

The all-share offer comprises 1.1 PCCW share per C&W HKT share, while the
cash-and-share mix is HK$7.23 and 0.7116 PCCW shares per C&W HKT share, the
source said. C&W HKT will in addition pay its shareholders a special dividend amounting
to $700 million before the deal completes, the source said. Cable & Wireless shares fell six
percent amid disappointment that the company was not getting more cash and was taking a
stake in an Internet company rather than Singapore Telecommunications Ltd. C&W HKT
shares remained suspended on Tuesday at HK$25.95, giving the company a market
capitalisation of HK$314.49 billion (US$40.4 billion).

PCCW shares also were suspended at HK$22.15, pegging its market value at
HK$225.49 (US$29 billion).

The shares were expected to resume trading on Wednesday.

SingTel shares did trade on Tuesday, registering a rise of S$0.12 to S$2.80 as of midday
despite the failed bid. Analysts said SingTel had been oversold during the long drawn out
bidding war and investors took some comfort that the uncertainty it entailed was over. In
Australia, the share price of Rupert Murdoch`s News Corp , which had allied itself with the
SingTel bid at the last minute, was up A$0.334 to A$23.734, but off earlier highs. The
SingTel move was seen as a healthy demonstration of News Corp interest in strategic
alliances, despite the bid`s failure.

FUTURE CAST WITH LI, INTERNET Confirmation of a deal for PCCW came shortly
after SingTel announced it had withdrawn from merger talks with C&W HKT after more
than a month of negotiations.

News Corp swiftly canceled its investment plans but said joint venture and investment
opportunities with SingTel would continue to be studied.

SingTel`s president, Lee Hsien Loong, said the group was disappointed with Cable &
Wireless`s decision, but would continue to seek alliances in Asia. "We acknowledge the
decision which has been made by the board of Cable & Wireless Plc regarding our offer.
However, we remain convinced, not only of the compelling commercial logic of our
proposals, but also of their solidity and stability," Lee said. Sources close to the talks had
said SingTel`s proposal hit a snag over political concerns by some Hong Kong factions
over Singapore gaining control of a major local utility.

NO HKT ASSET SALE PLANS Li told reporters he has "no concrete plan at the current
stage" to sell any of C&W HKT`s telecommunications businesses.

"I can`t say what will happen a year, two years or three years from now because our main
aim is to maximise shareholders interests," he said. But Li added that he was not
contemplating any layoffs and viewed C&W HKT`s employees as important assets for
expanding the telecommunications businesses.

PCCW is developing its own high-speed Internet service that will be beamed from
satellites to cable television systems throughout Asia, to be teamed with a new satellite
television channel called Network of the World. The services, however, are not scheduled
to be launched until later this year. With the acquisition of C&W HKT, PCCW gains one
of the world`s most sophisticated broadband delivery networks and more than a
half-million Internet subscribers.

C&W HKT also brings in considerable cash flow, with revenues of HK$32.41 billion
(US$4.17 billion) and profits of HK$11.51 billion (US$1.48 billion) in its last fiscal year.
(With additional reporting by Richard Baum in London) ((Hong Kong Newsroom +852
2843 6441, Fax [phone] [e-mail])) .

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