I Squared Is Said to Make HKBN Offer in Possible Bidding War

(Bloomberg) — I Squared Capital made a rival non-binding offer for HKBN Ltd., people familiar with the matter said, potentially setting up a bidding war for the Hong Kong-listed broadband provider.

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The infrastructure-focused investor submitted a preliminary proposal for HKBN that’s slightly higher than one by China Mobile last month, the people said, asking not to be identified because the deliberations are private. I Squared’s bid could be in the range of HK$5 to HK$6 a share, two of the people said.

Talks are ongoing and no final decisions have been made, the people said.

Trading in HKBN’s shares was halted on Monday morning pending an announcement in relation to the city’s code on takeovers and mergers, according to a stock exchange filing.

HKBN said on Nov. 20 that its board had received a non-binding proposal from China Mobile Hong Kong Co., a unit of the state-backed carrier, about a potential cash takeover bid. China Mobile has conducted due diligence on the potential acquisition and has been negotiating with HKBN’s major shareholders, buyout firms MBK Partners and TPG Inc., people with knowledge of the matter said earlier.

China Mobile has indicated it’s willing to pay at least HK$5 per share for their holdings, which would value HKBN at more than HK$6.5 billion (835 million), according to the people. HKBN shares have climbed 39% this year, giving the company a market value of about HK$6.4 billion.

I Squared owns closely held telecoms provider HGC Global Communications Ltd., which it purchased in 2017 for HK$14.5 billion. HGC, founded in 1995 and formerly known as Hutchison Global Communications Ltd., competes with HKBN by offering similar services in Hong Kong.

US-based I Squared had previously tried to buy HKBN but a deal was never reached, partly due to disagreements over valuation, Bloomberg News reported last year. HKBN drew preliminary takeover interest from investment firm IDG Capital earlier this year, Bloomberg News has reported.

HKBN offers internet as well as telecom solutions, data centers and Wi-Fi services. Its major shareholders also include Canada Pension Plan Investment Board and Singapore’s GIC Pte.

Representatives for MBK and TPG declined to comment, while I Squared, HGC and HKBN didn’t respond to requests seeking comment outside business hours.

–With assistance from Balazs Penz.

(Adds offer price in second paragraph, trading halt in fourth)

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