HKBN CEO says China Mobile’s HK$7.8 billion offer not good enough, open to more bidders

China Mobile’s HK$7.8 billion (S$1.3 billion) takeover offer for broadband operator HKBN is not good enough and the Hong Kong-based company is open to engage with more bidders to get the best value for shareholders, its CEO said on Monday (May 26).

State-owned China Mobile made an offer for HKBN at HK$5.23 a share in December, and Reuters reported last Friday, citing sources, that it was moving closer to a deal after its rival US-based I Squared Capital dropped out of the race.

HKBN chief executive William Yeung, who is also a board member and executive vice-chairman of the company, told Reuters China Mobile’s offer, which the board has not accepted, does not reflect the company’s growth over the past six months.

HKBN reported a 5 per cent rise in earnings before interest, taxes, depreciation, and amortisation (Ebitda) for the six months through May, higher than the 3 per cent by its major competitor Hong Kong Telecom, Yeung said.

The offer also did not take into account HKBN’s past capital expenditure, which has reached some HK$11 billion and future growth projections, Yeung said.

“I will look at our business, who we are, where we are, where we are playing in our interim resource enhancement, I’m very happy in continuing a 4 per cent to 5 per cent Ebitda goal in the years ahead,” he said.

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China Mobile’s HK$5.23 apiece offer for HKBN would translate into some HK$4.91 a share excluding dividend, Yeung said.

In response to Reuters story on Friday, Yeung said it was a “rumour” that Chinese sovereign wealth fund China Investment Corp (CIC) had vetoed I Squared’s plan to present a formal offer for HKBN, saying the board was still talking to both bidders. CIC is a minority shareholder in I Squared-controlled HGC Global Communications in Hong Kong.

“We are still talking to both parties (China Mobile and I Squared), and we are even open to talking to any others. I think the company should always look for the best and consider the interest of minority shareholders as well,” Yeung said.

Reuters reported in January that I Squared was preparing to trump China Mobile’s offer but would not go higher than HK$6 a share.

Yeung said I Squared made HKBN an “initial” competing offer, but declined to comment further.

His views were personal and would not represent the view of HKBN’s board, he added.

“There are still diverse views within the board,” Yeung said.

HKBN declined to comment. REUTERS