China Mobile has made a takeover offer for HKBN for as much as HK$7.8 billion (US$1 billion), joining a bidding war with US private equity firm I Squared Capital for one of Hong Kong’s biggest broadband service providers. The stock surged on trading resumption.

The world’s largest mobile-phone carrier by subscribers offered HK$5.23 per share for the company’s underlying shares, according to a Hong Kong stock exchange filing, or 7.6 per cent higher than its last-traded price. I Squared Capital made a non-binding offer to buy HKBN for an undisclosed amount earlier on the same day.

China Mobile said it has received irrevocable undertakings from two of HKBN’s biggest shareholders Canada Pension Plan Investment Board (CPPIB) and US private equity firm TPG, which own around 25 per cent of HKBN “in favour of the offerer”, according to its filing late Monday.

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CPPIB has a 13.9 per cent of HKBN while TPG owns 11.1 per cent stake in HKBN and South Korean private equity firm MBK Partners holds an 11.1 per cent stake, excluding convertible instruments, according to HKBN’s latest annual report. Singapore sovereign wealth fund GIC Private has a 7 per cent stake.

A visitor is seen at the stand of China Mobile during an exhibition in Shanghai. Photo: Handout alt=A visitor is seen at the stand of China Mobile during an exhibition in Shanghai. Photo: Handout>

China Mobile is offering HK$5.23 for each of HKBN’s 1.31 billion outstanding shares for a total of HK$6.86 billion. It will also pay the same price for other unvested share units and vendor loan notes, which could raise the takeover amount by another HK$937.7 million.

The offer provides “all shareholders with an opportunity to realise their investment in the company for cash amid an uncertain market climate marked by geopolitical factors and uncertain sentiment in the broader equity markets, among others,” China Mobile said.

HKBN shares jumped 6.2 per cent to HK$5.16 at 11am local time, as trading resumed after a suspension for the announcement. China Mobile slipped 1.1 per cent to HK$71.50.

HKBN shares have surged about 13 per cent since China Mobile expressed interest in buying the company in November, bringing the rally this year to 39 per cent, according to exchange data. That is more than double the gain in the city’s benchmark Hang Seng Index.

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