China's telecommunications giants China Unicom and China Netcom, both listed on the Hong Kong stock exchange, announced Monday each share of Netcom will be exchanged for 1.508 Unicom shares in a proposed merger.
The exchange rate was based on the price of China Netcom shares on the Hong Kong mainboard before their suspension from trading on May 23, with a 3 percent premium, said Tong Jilu, executive director and chief financial officer of China Unicom.
Chang Xiaobing, chairman and chief executive officer of China Unicom, also said each American depository share of China Netcom will be exchanged for 3.016 American depository shares of the new China Unicom, subject to shareholders' approval.
The merger is expected to be completed in October this year after the shareholders' conferences in September if everything went ahead smoothly, Tong said.
The merged group will have an enlarged capital of 23.76 billion shares, worth a total of 439.17 billion yuan (63.28 billion U.S. dollars). It is expected to be a provider of integrated services including mobile and fixed-line telecommunications, broadband, data and value-added services.
"The merger is in line with the trend of convergence of fixed- line and mobile networks, and is expected to enable the merged group to set clear strategy," Chang said, referring to the direction for the company to pursue 3G strength.
China Unicom, currently one of the six telecommunications giants in China, is a far second to the largest mobile carrier China Mobile, while China Netcom is a provider of fixed line telecommunications and broadband services.
China Netcom will cease to exist as a listed firm after the merger, subject to approval from the shareholders at the company's annual conference, which is expected in September, said Zuo Xunsheng, chairman and chief executive officer of China Netcom.
Shares of both companies will resume trading on Hong Kong exchange on Tuesday.
China Unicom also announced at the conference that it will sell its CDMA services at 43.8 billion yuan (6.31 billion U.S. dollars)and that its mother firm China Unicom Group will sell its CDMA network at 66.2 billion yuan (9.54 billion U.S. dollars) to China Telecommunications Corporation, the mother firm of China Telecom.
Source:Xinhua
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