CyberWorks, the worst-performing stock in Hong Kong's key index last year, said yesterday that tycoon Li Ka-shing's Hutchison Whampoa acquired a 0.8 percent stake in the company, valued at US$103 million, in exhange for control of Hutchison's rooftop satellite company.
"It may fuel a dream of increased buying by Hutchison and the city's best-known billionaire," said John Lo, an assistant director at BNP Prime Peregrine Ltd.
The transaction will return to Richard Li control of Hutchison Corporate Access, which his Pacific Century Group sold to Hutchison in 1995 for HK$581 million (US$75 million). Hutchison Telecommunications Technology Investments Group, which controls HCA, is the unit being acquired.
The agreement comes less than a month after the elder Li said there could be a conflict of interest if Hutchison, whose businesses include telecommunications, were to take a stake in his son's firm. CyberWorks said in a statement that the agreement was determined "at arm's length" after a valuation by financial adviser NM Rothschild & Sons.
Hutchison Managing Director Canning Fok will hold a news conference at 10:30 am in Hong Kong to discuss the transaction, said Laura Cheung, a Hutchison spokeswoman.
Some investors downplayed the importance of the transaction.
"It will take much more to get investors excited before they start to buy CyberWorks again," said Yvonne Leung, who helps manage US$2 billion in Asian investments at Towry Law (Asia) Ltd in Hong Kong. "Don't forget, the smaller guys have been burnt very badly on this stock."
The shares will be issued and allotted at HK$4.375, yesterday's closing share price for CyberWorks.
CyberWorks said HCA earned net income of about HK$14 million in its last fiscal year on revenue of about HK$308 million. The unit provides satellite-based network communications services in Asia.
HCA has about 70 percent of the roof-top satellite communication market in the region, and approximately 200 multinational customers in more than 40 countries. It operates rates on 15 different satellites and employs 70 staff.
CyberWorks shares were unchanged yesterday at HK$4.375, down from a high of HK$28.58 last February. Hutchison fell 2.4 percent to HK$91.80.
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