PCCW on Thursday said minority shareholders of Sunday Communications, the mobile company it acquired this year, had rejected its HK$401.3m (US$51.7m) buy-out plan despite support from China’s Huawei Technologies for the offer.
Hong Kong’s dominant fixed-line phone operator said the decision would not affect commercial operations of the two companies and that it would continue to run Sunday as a separate listing.
“We will continue to integrate the operations and drive synergies. The only disadvantage is the increase of overhead costs,” said Alex Arena, PCCW’s chief financial officer.
PCCW, which owns 79.35 per cent of Sunday, had been seeking to take Hong Kong’s smallest mobile company private after buying a 59.9 per cent stake in June.
PCCW left the mobile market in 2002 when it sold its remaining 40 per cent stake in mobile carrier CSL to Australia’s Telstra.
But PCCW’s previous attempts to privatise Sunday had been thwarted after it failed to persuade Huawei to sell its 9.91 per cent stake.
In September, it revived an offer to buy the 20.65 per cent of Sunday that it did not own for HK$0.65 a share. It received in October a written confirmation from Huawei that the Chinese company would vote for the proposal.
However, the deal was blocked on Thuesday after 17.2 per cent of Sunday’s independent shareholders rejected the offer. It is understood that Huawei, which owns 48 per cent of the shares held by minority shareholders, voted for the plan. Huawei, PCCW and Sunday declined to comment.
According to Hong Kong takeover rules, a privatisation proposal cannot be approved if more than 10 per cent of minority shareholders vote against it.