| BUSINESSWEEK ONLINE : NOVEMBER 1, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN BUSINESS
How Li Ka Shing Made Big Green on Orange (int'l edition) In money-mad Hong Kong, 71-year-old Li Ka Shing is known as Superman for his dealmaking abilities. Now he's done it again. Flanked by his 35-year-old son and heir-apparent Victor, the ebullient billionaire celebrated his biggest triumph ever at an Oct. 21 press conference. With his Hutchison Whampoa group set to pocket $14.6 billion in clear profits from selling its 45% stake in British wireless company Orange PLC, mild-mannered Li Ka Shing has lived up to his moniker as never before. Now, though, he has to show he can put the money to work. An immigrant from mainland China's southern Guangdong province, Li started as a manufacturer of plastic flowers in the 1950s, then moved on to amass a fortune in property. In the late 1970s, he took over Hutchison, a venerable Hong Kong-based British conglomerate or hong, in a move that heralded the rise of Chinese entrepreneurs and the waning of the British business elite. Hutchison, which still has many cell-phone ventures around the world, is widely known as the world's largest private port operator, with major operations in Britain, the Bahamas, and Indonesia, as well as Hong Kong and China. The group's reach is so extensive that its control of container terminals at either end of the Panama Canal has prompted U.S. Senate Majority Leader Trent Lott to claim that China's People's Liberation Army could dominate the vital Panama Canal shipping route through Hutchison -- an allegation apparently made simply because Li is Chinese. That clearly struck a raw nerve with Li, who twice told the Oct. 21 news conference that ''I don't have [even] a single handgun. How can I control [the Panama Canal]?... This is a joke.'' POCKET CHANGE. The Orange deal gives Hutchison $5.6 billion in cash and notes (the rest is in Mannesmann stock), a hefty war chest in Asia just as the region is emerging from recession. Impressive though the haul is, it's pocket change in the telecom industry -- and that's one of Li's problems. Li gave his press conference under a sign reading ''Hutchison Expands Footprint in Europe.'' The reality is more sobering: While the deal will make Hutchison Mannesmann's single largest shareholder and give it a board seat, Li is effectively cashing out of the European telecom business. Indeed, he says he has ''no intention of influencing [Mannesmann's] management.'' Hutchison still faces the problem of what to do with its scattered cellular operations in Hong Kong, India, Israel (where it's in the midst of an initial public offering projected to raise at least $500 million), Australia, and the U.S. If Li's willingness to sell off his crown jewel is any indication, look for Hutchison to build up its other telecom operations and sell them at a premium as the global industry consolidates. E-COMMERCE IPO. A big chunk of the Orange windfall may be poured into e-commerce to help Hutchison meet the threat posed by an upstart local e-tailing venture. Li said his company ''will be quite active'' in e-commerce and revealed for the first time that the group plans an IPO of its e-commerce ventures, although sources close to the company say such an offering would be some time off. So what will Superman do with his loot? That's the $14.6 billion question. Sources familiar with the company say no decision has been made. And the frugal Hutchison isn't used to spending billions of dollars. But it will likely invest more in Asia -- in telecom as well as in e-commerce. Indeed, it has been talking about investing in Chinese telecoms forever. If that happens, it could be a massive commitment of capital, although restrictions on foreign investment in China's telecom sector makes that option more difficult. Li's group is one of the few Asian companies outside of Japan that shows signs of being a global player. But the telecom venture suggests that Li is at least as good at flipping properties as at building enduring businesses. That's not a bad thing. Li backed his son Richard when he founded Asia's first satellite broadcaster, StarTV, in 1990. The father-and-son team sold Star three years later to Rupert Murdoch's News Corp. for $950 million. Star remains a chronic money-loser. So even if Li isn't building a long-lived empire, this canny Guangdong trader sure knows when it's time to sell. By Mark L. Clifford in Hong Kong _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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