Citic 1616 Holdings, a telecommunications service unit of Citic Pacific, announced yesterday it would acquire an internet service provider from its parent company for HK$253 million.
Citic 1616 will finance the acquisition by issuing 98.07 million new shares to Citic Pacific at HK$2.58 each, which will raise the parent company's stake to 52.56 per cent from 50.09 per cent. The transaction, pending Citic 1616 shareholders' approval, is expected to be completed by next month.
CPCNet Hong Kong, the target company, is expected to post a HK$26 million net profit this year, a 21.8 per cent increase from a year earlier. The company offers virtual private network, or VPN, services to multinational companies. VPN is a secure designated internet network for companies to connect their Asia-Pacific operations.
'The transaction is relatively small and can provide limited contributions to the company,' said Steven Liu, telecoms analyst for DBS Vickers. 'But it may be the beginning of a series of asset injections from Citic Pacific to Citic 1616.'
Citic Pacific management, however, did not confirm that speculation. 'We have no plan, at the moment, for further injections [into Citic 1616],' said Henry Fan Hung-ling, managing director for Citic Pacific.
Citic Pacific holds a 20 per cent stake in Macau Telecom, which will enter negotiations with the local government to renew its operating rights. 'We have not decided whether to spin it (Macau Telecom) off or inject it into another listed company,' he said.