A group led by Taiwan Cellular Corp (台灣大哥大), Cathay Life Insurance Co (國泰人壽) and Fubon Financial Holding Co (富邦金控) yesterday paid NT$65.6 billion (US$1.9 billion) for a stake in Chunghwa Telecom Co (中華電信), 2.4 percent more than the asking price.
The government sold 1.3 billion shares for NT$50.3 a share, in a coup for President Chen Shui-bian's (陳水扁) administration, which failed four times this year to reduce its holding in the phone company. The government needs the money to plug a budget deficit and refinance record national debt.
Cathay Life, the country's biggest insurer, bought 650 million shares for NT$32.7 billion. Taiwan Cellular paid NT$27.7 billion for 550 million shares. Fubon took 75 million shares for NT$3.8 billion.
The remainder was bought by smaller companies. J.P. Morgan was adviser to the bidders.
For Fubon, the purchase expands its investment in telecommunications. Fubon has a 10 percent stake in Taiwan Cellular and a 7.7 percent stake in Taiwan Fixed Network Ltd (
"With interest rates so low, it's not a bad long-term investment for Fubon because of the stable returns from Chunghwa's dividends," said Tom Lu, who manages NT$1.5 billion in stocks at President Investment Trust Corp (
The government will proceed with plans next year to sell American depositary receipts in the company to investors overseas, said Chang Chia-chu (張家祝), a vice minister of telecommunications.
Earlier overseas sales were scrapped after Chunghwa's share price dropped by half since its initial offering in September 2000.
"We'll find more opportunities to sell Chunghwa Telecom shares before the end of next year," Chang said.
The sale reduces the government's stake to 81.5 percent from 95 percent.
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