After losing last year's takeover battle for Hong Kong's dominant telephone company to Richard Li's Pacific Century CyberWorks Ltd. (PCW) , Singapore Telecommunications Ltd. (SGTJY) is back in town. This time to merge its b-to-b arm with a consortium of players that includes most of Hong Kong's biggest business names with one major exception: Li's famous tycoon father, Li Ka-Shing.
Lee Hsien Yang, the president and chief executive of Singapore Telecommunications, was in Hong Kong on Wednesday to formally announce the merger of ST's majority-owned Sesami.com with Hong Kong's star-studded b-to-b company, Asia2B.com. Asia2B.com's shareholders include established conglomerates such as Jardine Matheson, Swire Group and the technology businesses of local property heavyweights such as Sun Hung Kai Properties (SUHJY) and Wharf (Holdings). Other backers include the venture capital firm WI Harper Group and the software provider Commerce One (CMRC) . Beijing Enterprises, a company with extensive business and government ties in China, is also a shareholder.
Size does matter, said Lee of the new company's girth and geographical reach. Knitting together a who's who from two cities that have long been business rivals, the company expects that some 1,300 trading companies across industries ranging from chemicals to telecommunications to health care to transportation will use it to develop online procurement and other services.
Each side will take a 50 percent stake in the new company, which will be called Sesami.
With a combined staff of 120 people based in Beijing, Hong Kong, Bombay and Singapore, the company said it will have a total asset value of $72 million and a monthly online trading value that will reach $320 million. The online union should go smoothly since both companies have already been using Commerce One software, but the logistics of coordinating with such far-flung partners could prove a headache, analysts agreed. For example, the company has not designated a headquarter base, and one executive involved in the newly formed company said that for now, board meetings would be held alternately in Hong Kong and Singapore.
When Asia2B.com was formed it was seen as a defensive move by other companies in Hong Kong against the move by Ka-Shing's already overbearing empire into new-economy businesses. But the company now says that it has always extended an invitation to all players in Hong Kong.
And Lee played down suggestions that Singapore Telecommunications is, in fact, teaming up with Li's rivals in Hong Kong to compete against him on his own turf: "We are committed to open, neutral hubs that are not controlled by any one company. We see so reason to wish ill will on parties who do not participate in this venture," he said.