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Five Line Up to Take Huawei's Mobile Unit
(03 Jul 2008, BWCS Staff)The field of competitors vying to buy the mobile handset division of Chinese vendor Huawei has been reduced to five - all private equity companies. According to reports in the Wall Street Journal, the remaining bidders include: Bain Capital Partners, Goldman Sachs' private equity arm, Kohlberg Kravis Roberts and Silver Lake Partners. The fifth possible partner, named by the US newspaper, is AEA Investors, whose bid is being masterminded by former Nortel chief Bill Owens.
Differing reports value the deal at between US$3.5 billion and US$4 billion. All agree that the sale represents a rare chance to purchase a large and ongoing operation on the Chinese mainland. The Chinese company hopes that the arrival of a US equity partner will enable Huawei to make more of a mark in western markets, particularly in North America. The assets up for sale include its mobile phone and data card business.
The Chinese company reports that its fast-growing mobile phones unit generated revenues of over US$2 billion in the last twelve months, a 100% increase on the year before. The unit is said to return positive cash flow of around US$250 million. Assuming the purchase goes ahead, the deal would represent one of the largest acquisitions in mainland China this year.
One source, quoted by the Journal claims that Blackstone Group, Carlyle Group and TPG Capital did not make it through to the second round of bidding.
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