China Mobile launches takeover offensive: A bidding war for HKBN ignites

The shares of Hong Kong broadband provider HKBN soared after China Mobile clarified its acquisition plans and formally submitted a bid in the emerging bidding contest. The state-backed telecommunications company is offering a price of HK$5.23 per share in cash, representing a 41% premium over the previous stock price. Bloomberg News had reported on the acquisition talks last month. On Tuesday, the price of HKBN shares in Hong Kong rose by up to 7.6%, reaching the highest level since May 2023, while China Mobile faced a decline of up to 0.9%. China Mobile secured irrevocable commitments from major shareholders such as the Canada Pension Plan Investment Board and a subsidiary of TPG Inc., who together hold 25% of HKBN shares. The telecommunications giant plans to improve HKBN's financial situation after the acquisition by reducing interest expenses. With the formal offer and commitments from major shareholders, China Mobile gains an advantage over competitor I Squared Capital. The planned acquisition will enable China Mobile to expand its service portfolio in Hong Kong while mainland companies strengthen their presence in the metropolis. The total cost of the transaction could reach up to HK$7.8 billion once restricted shares and supplier loans are taken into account. The offer is conditional upon no objections from Hong Kong's competition authorities and the completion of necessary filings with Chinese regulators. China Mobile does not aim to delist HKBN but is willing to keep the company publicly traded. China International Capital Corp. is advising China Mobile on this deal. HKBN also confirmed on Monday that it received a preliminary, non-binding interest from I Squared, negotiating through its portfolio company HGC Global Communications.