Television Broadcasts (TVB)

TVB’s buyer, backed by funds, to unveil takeover details by next week

“We’ve been waiting almost 10 years for this,” said Alex Chow, founder of TLG, which is making an unsolicited takeover offer for TVB

PUBLISHED : Wednesday, 15 February, 2017, 10:21pm
UPDATED : Thursday, 16 February, 2017, 12:59pm

TLG Movie and Entertainment Group, the suitor seeking a controlling stake in Television Broadcasts, said it has the financial backing of two mainland Chinese funds and an overseas party for its takeover, and will publicise the details of its offer by the end of next week.

TVB, as Hong Kong’s main free-to-air broadcaster is called, this week revised its HK$4.21 billion stock buy-back plan, raising the price per share by 15 per cent to HK$35.075 to thwart TLG’s bid. The revision would not be enough of a deterrent because it was still below the network’s fair value, TLG’s founder and chief executive Alex Chow said.

“We have been waiting almost 10 years for this,” Chow said in a Wednesday interview with the South China Morning Post. “We will persevere with the plan because our backers agree with our assessment that TVB has a great franchise and is on the cusp of something great.”

TLG is a Hong Kong-incorporated unit of Beijing’s Top Legend Group, which calls itself an investor in the media, entertainment and real estate sectors. The little-known company announced an unsolicited takeover bid for 29.9 per cent of TVB on February 8, asking the broadcaster’s shareholders to reject a January 24 buy-back proposed by TVB’s controlling shareholders.

The takeover offer took the market and most of the network’s directors by surprise.

“We do not know anything about this buyer,” Allan Zeman, a restaurateur and TVB director, said during the sidelines of a Wednesday event in Lan Kwai Fong. “We do not know who they are. We do not know if they really have the money for the transaction. We can only wait and see if the buyer will give us more information.”

Hong Kong’s broadcasting ordinance stipulates that only the city’s permanent residents are eligible to be holders of a broadcasting licence. TLG’s shareholders comprised two Hong Kong natives, Geoffrey Wai Ho-choi and Kelvin Dong Wei-tsun, while it had the financial banking of two mainland Chinese funds and a Southeast Asia-based fund, Chow said.

TVB, founded half a century ago by movie mogul Sir Run Run Shaw, is where some of the biggest stars in Hong Kong cinema began their careers, including Andy Lau Tak-wah, Stephen Chow Sing-chi and Chow Yun-fat. It is now controlled by Young Lion Holdings with a direct stake of 26 per cent while Shaw’s widow Mona Fong Yat-wah owns 3.9 per cent.

TLG is seeking to buy 29.9 per cent of TVB, equivalent to the combined stakes of Young Lion and Fong.

The broadcaster’s buy-back plan would allow Young Lion and Fong to strengthen their grip on TVB to 41.9 per cent, according to a filing.

That had compelled TLG to take action and announce its takeover proposal “before their control on the company becomes too entrenched”, Chow said.

Still, the unsolicited offer by TLG would not disrupt TVB’s buy-back even if the book closure period for the proposal was to be extended to March 13 from February 20, the network’s spokesman S.Y. Tam said in response to the Post’s query.

TLG “sent a fax to TVB’s board of directors indicating their interest through a lawyer on February 7, and requested for a meeting with us”, Tam said. “We replied them on February 9, asking for more information such as the company’s structure, source of funding, the name of the financial adviser and the people who support the deal ... We also asked if they can confirm the funds available for the potential takeover. But we have not received any answer so far. They just replied that all be provided in due course. There is not much that we can do now.”

TLG first made contact with Fong through an intermediary as early as 2007 while Shaw was still alive, to express interest in acquiring TVB, Chow said. That is a claim that Tam contested, maintaining that the broadcaster’s senior management were unfamiliar with TLG.

Fong could not be reached to verify Chow’s claim.

A second attempt was made in 2011 to buy TVB, supported by a different group of private equity backers, Chow said.

“Before the offer was made, the shares were sold,” he said.

Eventually, US fund Providence Equity Partners, TVB’s chairman Charles Chan Kwok-keung and HTC Corp chairwoman Cher Wang Hsiueh-hong bought their 26 per cent in 2011 for HK$6.26 billion, or HK$55 per share. Their consortium was named Young Lion.

Chinese media mogul Li Ruigang bought an undisclosed stake in Young Lion in 2015 and was named vice-chairman of the board in October last year after the appointment was approved by Hong Kong’s Chief Executive Leung Chun-ying.

Additional reporting by Enoch Yiu

The article has been amended to say TLG’s second attempt to buy TVB was made in 2011, not 2014