Raiders Of TVB

Country Garden's Yeung Kwok-keung is apparently the front-runner in the bidding for Run Run Shaws indirect stake in Television Broadcasts Ltd (0511), after he secured HK$3 billion in financing from Lee Shau-kee, the Henderson Land chairman and also sometimes known as HK's Warren Buffett, that gives him a clear edge over the other suitors.

Yeung has been interested in acquiring Run Run Shaws stake in holding company Shaw Brothers (0080) for at least six months. The Country Garden chairman may have outbid the other potential suitors. Several foreign private-equity firms are said to be vying with Yeung to take over the Shaw Brothers stake, but the chance for their bids to be successful is believed to be slim considering the present market conditions

There have been rumors in the market for years that various parties had approached Run Run Shaw, who is now 100, about taking control of Hong Kong's most influential media outlet. The deals always fell through because of the high premium sought by Shaw. The source said it is unlikely a foreign private-equity firm would be willing to pay Shaw's asking price, while Yeung is comfortable with the price tag. The credit crunch in the West could also make it more difficult for private-equity firms to line up funding.

One reason for Yeung's aggressiveness in bidding for control of TVB is that having an interest in a Hong Kong media and entertainment company would significantly raise his profile and status in Hong Kong, something Yeung is keen to do. Yeung, who was born in Foshan, Guangdong province, and worked as a farmer, boatman and construction worker before founding his property company, has no previous business ventures in the media field.

Run Run Shaw has a total beneficial interest of 32.49 percent in TVB. Holding company Shaw Brothers, in which Shaw has a 75 percent interest, is the single largest shareholder in TVB with a 26 percent stake. The Shaw Foundation Hong Kong Ltd holds a 6.23 percent stake in TVB.

Acquiring Run Run Shaw's stake in Shaw Brothers would likely require between HK$10 billion and HK$11 billion, according to the source, so Yeung would need to secure additional financing from banks to clinch the deal.

The apparent deal still makes little sense to me. One would think that Run Run Shaw would have "higher objectives" in offloading TVB, not just on price alone, but to ensure that the longevity and continued growth path of TVB be secured. Selling to the Country Garden's chairman is like selling to Vincent Tan, where got difference? If its HK$10 billion, I am sure Ananda Krishnan would be falling over himself to buy TVB, if he is not then he has some very poor advisors by his side. The balance sheet of Astro may not be able to take the whole deal, may have to be shared with Usaha Tegas first - then take Astro private - that would be the way to go.

p/s photo: Nasha Aziz