Richard Li to offload HKEJ publisher to PCCW for HK$70m

Hong Kong's PCCW has announced the acquisition of Clermont Media, the publisher of the Hong Kong Economic Journal (HKEJ), for HK$70 million (US$9 million). The transaction will see Clermont Media become an indirect wholly-owned subsidiary of PCCW, according to a stock exchange filing on Tuesday.

Clermont Media is responsible for publishing the HKEJ, a Chinese-language daily newspaper renowned for its comprehensive coverage of economic and financial news. It competes with the likes of Alibaba Group's South China Morning Post. Apart from the publication of newspapers and journals, Clermont Media also operates a variety of online platforms, including websites and mobile applications, offering content on finance, economy, investment, lifestyle, and education.

The deal comes nearly two decades after tycoon Richard Li got involved in Clermont Media in 2006. The transaction reflects a strategic reshuffle of assets within Li's business interests, consolidating media operations under the PCCW umbrella.

The purchase price was determined through arm's length negotiations, taking into account the target group's business operations and comparable market transactions. The agreed amount represents a price-to-revenue multiple of 0.69 times, aligning with industry standards.

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Li, who holds a 31.8% stake in PCCW, is also directly linked to Clermont Media, which is owned by an offshore trust he established. As a result, the transaction qualifies as a "connected transaction" under Hong Kong Stock Exchange regulations.

Assuming Li's personal loan to Clermont Media was fully converted into equity by June 30, 2024, the company's net loss for the first half of 2024 would have been HK$3 million (US$385,000), according to the filing. For the full years 2023 and 2022, net losses were HK$30 million (US$3.9 million) and HK$16 million (US$2.1 million), respectively. As of June 2024, the company's net assets were valued at HK$9 million (US$1.2 million).

With the acquisition, PCCW aims to enhance its media content offerings, optimise advertising and subscription revenues, and leverage its extensive resources to improve operational efficiency. The company believes that integrating the HKEJ's established platforms will bolster its presence in the financial news sector and provide synergistic benefits across its media portfolio.

The acquisition is expected to be completed within 30 calendar days of signing the sale and purchase agreement, subject to customary conditions.

Meanwhile, PCCW operates across various sectors, including telecommunications, media, information technology solutions, and property development.

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