Li Ka-shing’s (李嘉誠) Hutchison Whampoa Ltd (和記黃埔) agreed to acquire Telefonica SA’s O2 unit in the UK, intensifying a push into businesses that provide stable income as the billionaire continues his efforts to remake the conglomerate.
The ￡10.25 billion (US$15.24 billion) price includes an initial sum of ￡9.25 billion in cash, with the remainder to be paid when certain financial targets are met, Telefonica said on Tuesday. O2 said regulatory approval could take a year, while Madrid-based Telefonica said it expects the transaction to be completed by June next year.
Hutchison shares rose in Hong Kong trading as the deal — reached after two months of exclusive talks — paves the way for merging its Three-branded business with O2 to create the UK’s largest wireless provider with more than 30 million subscribers.
It also advances Li’s focus on businesses that consumers rely on for basic services, insulating the retail-to-ports conglomerate’s income from economic cycles.
“This is a continuation of the company’s participation in businesses that relate to daily necessities,” said Ben Kwong, a director at brokerage KGI Asia Ltd in Hong Kong. “They will continue to acquire related business, and over time, when they mature, they may restructure or spin it off.”
Telecommunications was Hutchison’s second-biggest business by revenue last year, after retail chains and before ports, according to data compiled by Bloomberg.
The shares rose by 2.12 percent yesterday to HK$105.80 in Hong Kong trading as of 3:41pm. Hong Kong’s benchmark Hang Seng Index rose 0.43 percent.
The deal is to be funded by a ￡6 billion bridge facility that Hutchison 3G UK Investments has entered into with HSBC Holdings PLC and Hutchison’s own cash resources, the company said yesterday in a statement to the Hong Kong stock exchange.
The deal comes as Li, Hutchison’s 86-year-old chairman, is overhauling his business empire before handing the reins to his eldest son, Victor Li (李澤鉅).
Li Ka-shing is merging his two biggest companies and plans to spin off their real-estate assets into a separate unit later this year.
That has not stopped Hutchison from pursuing other deals as Europe’s telecommunications firms combine to gain more pricing power and amid sluggish economies that restrain the industry’s growth. In Italy, the company is in talks to merge its local operations with those of VimpelCom Ltd, according to people familiar with the matter.
Revenue from telecommunications services in Europe is expected to decline by 1.5 percent this year after falling 2.2 percent last year, according to researcher Ovum. Besides mergers and acquisitions, carriers are pushing for more lenient regulation and introducing faster networks, it added.
“They can drive a lot of synergies” with the agreement deal, said James Britton, an analyst at Nomura Holdings Inc in London. “Whether that really equips them to be fully competitive in a converged UK market remains to be seen.”
Hutchison’s agreement would reduce the number of UK wireless networks to three from four. Hutchison is betting on size to compete, taking on rivals that are adding services such as TV and Internet access to lure customers.
The deal “will create a business with unmatched scale and strength that will allow us to better compete against other operators in the marketplace,” Canning Fok (霍建寧), Hutchison’s group managing director, said in a statement.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS