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Australia’s Macquarie Group wants to recruit China Netcom as an ally in its bid for PCCW’s telecommunications and media assets as it fights a rival offer from TPG Newbridge Capital.

According to a person close to the transaction, Macquarie has structured its $7.3bn takeover offer so that Netcom, which owns 20 per cent of PCCW, could retain its stake in the assets.

Netcom on Thursday reiterated its view that it does not want to see any changes in the Hong Kong company. Netcom’s reluctance to endorse openly the proposed asset sale will disappoint bidders and Richard Li, PCCW chairman. It is understood Mr Li initiated the deal by first putting out feelers for potential offers.

This seems to confirm widespread speculation in Hong Kong that Mr Li is eager to leave Hong Kong’s fixed-line giant.

Although Netcom has no legal right to block the sale, the state-controlled company’s support could help Macquarie overcome potential political opposition in Beijing.

Macquarie is waiting for a decision from the Chinese company, according to people close to the situation. A Netcom official said it remained reluctant to endorse either of the consortiums.

Macquarie, which began talking to PCCW about the takeover 4-5 weeks ago, presented its offer to the Hong Kong company on Friday. But it was caught off-guard by the reaction from Netcom, which issued a rare and pointed statement on Monday.

On Tuesday, TPG Newbridge tabled a $7.55bn counter-offer, sparking a bidding war that is expected to draw more suitors. TPG Newbridge is attempting to present its offer as more palatable to Netcom and the Chinese government.

PCCW’s shares were up 10.6 per cent to HK$5.75 in just eight minutes of trading yesterday before being abruptly suspended. Investors were also encouraged by news that Mr Li wants to take PCCW private after a deal.

Copyright The Financial Times Limited 2017. All rights reserved.
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