In a deal that wrong-footed the market, Citic Pacific has agreed to sell its near 8 per cent stake in Hongkong Telecom to Chinese state-controlled Everbright Holdings for $11.39 billion.
Trading in Citic Pacific and Telecom shares was suspended before the market opened and observers said they believed this was a prelude to a long-expected deal to bring a mainland company into Telecom as a new shareholder.
It had been widely believed that Telecom's British parent, Cable & Wireless (C&W), would sell part of its 59 per cent stake.
Citic Pacific said it had agreed in principle to sell its 90.68 million shares (7.7 per cent) in Telecom at $12.60 each - a 16 per cent discount to Thursday's closing price.
'No agreement has yet been signed, and there is no guarantee that the discussions will result in an agreement,' Citic Pacific said.
Citic Pacific would have no further stake in Telecom after completion of the deal and its two representatives on the Telecom board will resign.