Forever delayed

14 April 2009 By John Foley Follow @johnsfoley

It looks like a juicy profit. The Hong Kong telecom is trading for 10% less than shareholders agreed to take from tycoon Richard Li. But the deal was made in better times. So Li might not mind if regulators shoot it down. He might even be looking for a semidignified way out.

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On April 14, shares in PCCW, the Hong Kong telecom, were trading 10% below the value of a HK$4.50ashare takeover offer. Local entrepreneur Richard Li and stateowned telecoms firm China Netcom have offered to buy the 48% of PCCW they don't already own. Their offer, already accepted by shareholders, expires on April 22.

The Securities and Futures Commission, Hong Kong's market watchdog, has challenged the takeover in a local court, concerned about the use of socalled sharesplitting to influence the outcome of the shareholder vote. An initial ruling favoured PCCW, but the watchdog has appealed.

The SFC alleges that a director of PCCW asked a manager at insurance firm Fortis to hand out shares to around 500 agents who would profit were the deal to go through. Hong Kong law says that a majority of shareholders by number, as well as value, must approve the buyout.

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