HKBN’s (1310) major shareholders are eager to exit amid a stalled buyout process, and any future acquisition bid will likely be lower if the deal falls through, according to Sing Tao Daily.
China Mobile's (0941) acquisition proposal for the local broadband service provider has remained in limbo with no approval given by mainland regulators since the state-owned telecom giant’s bid in December, The Standard's sister newspaper reported on Monday.
The other potential buyer, I Squared Capital, which expressed its interest in purchasing HKBN at a higher price, has still not yet submitted any offer.
Its hesitation could be tied to financial considerations and long-term planning, and the prolonged delays from the buyers could strengthen their negotiating positions, Sing Tao reported.
A fund under I Squared Capital, which acquired HKBN’s rival HGC Global Communications in 2017, is approaching maturity with underwhelming returns, the newspaper said, adding that this may pressure the fund to pursue new investments such as acquiring HKBN, with a strategy to integrate and divest the assets later for better returns.
Given that I Squared Capital is HGC’s owner, any move to acquire HKBN could require additional compensatory measures to secure approval from the Office of the Communications Authority, adding complexity to the deal, according to the report.
Also, ongoing Sino-US tensions pose challenges for US firms like I Squared Capital to successfully clinch the deal, it added.
If China Mobile’s high-premium bid does not get cleared by the mainland regulators and results in a withdrawal of the offer, HKBN’s share price is likely to decline sharply, it said.
China Mobile in December offered to buy HKBN for a total of HK$6.86 billion, or HK$5.23 per share. It said at the time that shareholders with a nearly 25 percent stake in HKBN had given an “irrevocable undertaking” in favor of its offer.
STAFF REPORTER
China Mobile in December offered to buy HKBN for a total of HK$6.86 billion. BLOOMBERG
