• Bank Of China, CSFB, UBS Warburg ? Advisors to PCCW
  • Chase Fleming - Advisor to HKT
  • Merrill Lynch, Greenhill ? Advisor to Cable & Wireless
  • ING Barings ? Fairness opinion
  • Salomon Smith Barney ? Advisor to board of PCCW's Singapore parent
  • Morgan Stanley Dean Witter - Advisor

PCCW's acquisition of Hong Kong phone company, C&W HKT is the most significant M&A transaction of the year. It broke Asian records in terms of size. It also broke the mould in terms of audacity ? we had a well-established, ex-monopoly telecom company being bought by a company riding the speculative internet wave and yet to make a cent of profit.

From the acquirer's point of view, this was a fantastic deal. PCCW's boss Richard Li managed to use his bubble stock to buy one of Hong Kong's great assets. And more credit to him for his clever financial engineering.

His strategy was brilliant. In the midst of a tech mania, he talked everyone round to his vision and saw his stock soar. He knew, however, that this may not last forever and when SingTel's bid for HKT hit political problems ? Beijing was allegedly not happy about it ? he came in as the well-connected white knight. Using his personality (and one must imagine his genealogy) he managed to amass $12 billion of leveraged finance from banks in a matter of days.

He was also clever enough to see that this deal would be fought out in the newspapers and research reports, and above all by the opinion and good graces of analysts and investment bankers. So he ensured that almost no bank was able to give an independent view on the deal ? they were all working on it in some shape or form.

From a banker's perspective this was definitely the M&A transaction of the year as the fees paid were so enormous. For only four months or so of work, a fee pool of around $130 million is thought to have been up for grabs. Compare that to the typical deal in Korea that takes 18 months to do, nearly kills you and has disputed fees at the end.

Undoubtedly this was the jackpot deal of the year for bankers and Richard Li, but what of investors? One must say that since completion, the stock price of PCCW has collapsed. And as for Cable & Wireless's shareholders, they entered into a deal that started as a $38 billion transaction and ended up at $28 billion and could still end up as less. But it was the Cable & Wireless people who approved the sale of the business to PCCW in the first place. This is one of those deals that was not a win-win situation for everyone Yet what it represented was so significant that it has changed the possibilities of Asian M&A forever.

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