Tom Group, Hutchison Whampoa's media arm, may offer at least HK$1.6 billion to buy all the shares it does not own in Tom Online, three years after the unit listed on the Growth Enterprise Market. Trading of shares in Tom Group and its 66 per cent-owned Tom Online, a mainland-based mobile telephone value-added services provider, was suspended pending news of a proposed privatisation. Tom Group might buy all the Tom Online shares it did not own at a 30 to 40 per cent premium over the present share price, or about HK$1.50 per share, the price at which the stock was floated in March 2004, a source said. The shares of Tom Online, which raised HK$1.3 billion in its initial public offering, last traded at HK$1.14 before being suspended. Tom Group shares stood at 93 HK cents. Tom Group needs at least HK$1.6 billion to buy out the shares, based on Tom Online's share price. Tom Online is also 9.9 per cent held by Solina Chau Hoi-suen, a business partner of Hutchison chairman Li Ka-shing, according to stock exchange information. The unit was spun off after Tom Group bought Ms Chau's private investment, Beijing Lei Ting Wu Ji Network, for HK$1.02 billion in November 2003. The business was involved in mainland mobile interactive voice services. Ms Chau cashed in HK$514 million as half the consideration from Tom Group, with the remainder settled by the issue of Tom Online shares. She would be able to cash in again if she sold her 9.9 per cent holding in the privatisation scheme. Tom Online shares reached a historic high of HK$2.75 in June last year before being hit by a government policy to regulate the mainland wireless internet sector, including double confirmation by users for services through handsets. The shares tumbled 62 per cent within three months to a low of HK$1.02 in September last year. 'The reason for Tom Online's privatisation should be simple - because the valuation is low,' said Wong Chi-man, a telecommunications analyst at Everbright Securities. 'The business was too reliant on mobile phone value-added services, which accounted for 92 per cent of revenue, once the government started cleaning up the market,' he said. Tom Online accounted for 51 per cent of Tom Group's revenue for the six months ended June last year.