Hong Kong Broadband Network (HKBN) has entered into a merger agreement with MBK Partners and TPG, the joint owners of WTT, to acquire all of WTT in exchange for a combination of HKBN shares and vendor loan notes. HKBN expects the merger with WTT, an enterprise-focused operator with fixed line infrastructure in Hong Kong, to enhance service capabilities, diversify its business portfolio, and upgrade the quality of service offerings to enterprise customers through increased footprint and capacity.
WTT and HKBN’s enterprise services business are highly complementary given WTT’s focus on larger corporate clients and HKBN’s focus on SME clients, HKBN said. The transaction is also expected to provide for value creation opportunities through synergies of combined cost efficiencies and cross-selling opportunities to the enlarged customer base.
WTT provides data connectivity, internet access, IP-based voice telephony, public cloud services, as well as mission-critical system integration services. The WTT network covers more than 5,400 buildings as of June and serves over 56,000 enterprises in Hong Kong.
Upon closing of the transaction, each of MBK Partners and TPG will own approximately 11.66 percent of HKBN. In addition, each of MBK Partners and TPG shall hold a vendor loan note valued at HKD 970 million. As part of the transaction, HKBN will assume the existing debt and cash of WTT.
MBK Partners and TPG shall each nominate a director for appointment to HKBN’s board at closing, subject to approval of shareholders. The transaction, expected to close by the first quarter of 2019, is subject to the approval of shareholders and regulators.
