HONG KONG: Hong Kong tycoon Li Ka-Shing’s Hutchison Whampoa said Friday it is in ‘exclusive negotiations’ to buy mobile phone giant O2 for up to US$15.4 billion, in a deal that would create Britain’s biggest mobile phone group.
Hutchison confirmed in a statement that it was in talks to buy the company from Spain’s Telefonica for US$9.25 billion, with a deferred further payment of up to US$1 billion after completion of the deal.
It added that the deal was still subject to due diligence and regulatory approvals.
“The negotiations may or may not result in any transaction,” the statement said.
Shares in Hutchison, which had been suspended for a short time Friday morning as reports swirled over the sale, were up 2.6 per cent by 0550 GMT.
Hutchison already owns Britain’s Three mobile phone network and the purchase of O2 would create the country’s largest mobile company.
British telecoms giant BT had said in November that it was in preliminary talks to buy back O2 – its former domestic mobile phone division – from Telefonica.
But it then announced in December that it had entered exclusive talks with the owners of EE, another British mobile phone operator, in a deal potentially worth US$12.5 billion.
Hutchison’s move to buy O2 comes after Hong Kong investment icon Li – a former plastic-flower seller who is now Asia’s richest man – announced this month a US$24 billion revamp of his vast business empire, and is the latest in a string of purchases.
Last week his Cheung Kong Infrastructure Holdings (CKI), and its parent Cheung Kong Holdings bought Britain’s Eversholt Rail Group for US$2.5 billion.
Eversholt is one of Britain’s three main rail rolling stock companies, owning around 28 per cent of the country’s passenger trains.
That deal was CKI’s third investment in the past six months, following the purchase of a stake in Canadian off-airport car park business Park’N Fly in July and the acquisition of Australian gas distribution company Envestra in October.
The latest announcements come just after 86-year-old Li – who is worth US$30.6 billion according to Bloomberg’s Billionaires Index – announced a sweeping re-arrangement of his sweeping business empire this month.
The new structure will see Cheung Kong Holdings, his flagship firm, take over separately quoted subsidiary Hutchison Whampoa.
The combined entity will be split into two, creating a focused property firm and an international conglomerate, including interests in telecoms, utilities and ports.
The revamp is also expected to pave the way for Li’s retirement and follows speculation of a handover to his son Victor.
News of the restructuring saw shares in both Cheung Kong and Hutchison – two of Hong Kong’s largest firms – rise at their fastest rate in more than 15 years. — AFP