(Bloomberg) -- PCCW Ltd. Chairman Richard Li abandoned his $2.1 billion bid to buy out Hong Kong’s biggest phone company after the city’s Court of Appeal blocked the deal, prompting the stock’s biggest decline in more than eight years.
Li and co-bidder China United Network Communications Group Corp. will not extend the offer beyond the original deadline of today, PCCW said in a statement to the city’s stock exchange. The shares, which resumed trading after being suspended since April 16, plunged 14 percent to HK$3.54 as of 10:01 a.m., the biggest decline since September 2000.
The Court of Appeal yesterday overturned a lower-court verdict on April 6, blocking Li’s five-month effort to buy the city’s biggest phone company. The ruling may prevent Li, who has tried to reduce his PCCW stake three times in the past three years, from taking over the company for at least 12 months.
“Regulations prohibit another bid for a year,” Anand Ramachandran, an analyst at Citigroup Inc., wrote in a report today. “An aborted stake sale process has proven other acquirers are not willing to pay what shareholders desire.” Citigroup downgraded the stock to “sell” from “hold” and cut the share- price estimate 27 percent to HK$3.
Li, the 42-year-old son of Hong Kong’s richest man, and co- bidder China United, which is the second-biggest shareholder in the phone company, offered to pay HK$4.50 a share to take over the company.
PCCW will continue with the planned payment of a special dividend of HK$1.30 per share and will resume its regular payout policy, the company said in the statement.
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