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PCCW shareholders give nod to buyout offer of US$2.05b

PCCW Ltd shareholders approved the HK$15.9 billion (US$2.05 billion) buyout offer led by Chairman Richard Li, allowing the billionaire to take Hong Kong's biggest phone company private after the stock slumped.

The HK$4.50-a-share bid was supported by more than 75 percent of stockholder votes at a meeting in Hong Kong yesterday, PCCW Director David Ford said after the ballot.

PCCW has lost more than 90 percent of its value since Li, the son of Hong Kong's richest man, used his Internet startup to buy the former Cable & Wireless HKT Ltd in 2000. The buyout plan requires clearance from the regulator amid allegations insurance agents were offered stock in return for supporting the proposal.

"We'll take the offer to avoid a further fall in the stock," Harfun Ven, who helps manage US$1 billion of Asian equities, including PCCW shares, at Robeco Hong Kong Ltd, said before the ballot. "We don't think HK$4.50 represents the full value of the underlying businesses, but in this type of market, companies trade at a discount."

Shareholder activist David Webb filed complaints to government agencies including the Securities and Futures Commission, alleging some Hong Kong insurance agents were offered PCCW stock for supporting the buyout plan. The claims may "cloud" the outcome of the takeover plan even if the co-bidders carried yesterday's vote, Ven said.

The SFC should review the ballot to determine whether newly registered PCCW shareholders had affected the outcome of the vote, Webb said in a Bloomberg Television interview yesterday. The investor activist, who owns 10 shares in PCCW, said he would vote against the buyout offer because it undervalued the company.

"The regulators have been too slow to act on the allegations," Starry Lee, a Hong Kong legislative council member, said at the meeting. "This is an important matter, and Hong Kong's standing as an international financial center is at stake." Li, 42-year-old son of Li Ka-shing, and co-bidder China United Network Communications Group Co raised their offer 7.1 percent in December, bolstering support among minority PCCW investors seeking to exit the phone company after the stock slumped for nine straight years.

Li failed in three attempts since 2006 to reduce his stake in the company.

The shares, suspended from Hong Kong trading yesterday on HK$4.17 pending the vote, have plunged 97 percent since their split-adjusted peak of HK$131.75 in 2000. That year, Li's Internet startup, Pacific Century Cyberworks Ltd, took over Cable & Wireless HKT, creating a company valued at about US$41 billion in the biggest merger between two Asian firms at the time.



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