Two Groups in the Lead for Huawei's Mobile Phone Division
Private equity groups lead by Bain Capital and Silver Lake Partners are reported to be leading in the bidding to take a stake in Huawei's mobile phone division. General Atlantic has withdrawn from the bidding, reports the Wall Street Journal.
AEA Investors - which is partly backed by the Qatar sovereign investment fund, had partnered with General Atlantic, may try to join Bain or Silver Lake, unnamed sourced said, asking not to be identified because the talks are confidential.
Kohlberg Kravis Roberts (KKR) and Blackstone Group had been shortlisted in the talks, but did not pass the first round.
Huawei plans to sell off its mobile phone, laptop, wireless data-card and home router businesses - retaining its network infrastructure division. The divestment of the handset division into a separate company could well fuel speculation about industry consolidation - particularly as Motorola's handset division is being spun off into a separate company at the moment.
Huawei had been looking to sell a 49% stake in the company, but is understood to be interested in selling a majority stake if the price is suitable.
According to people who have seen the information memorandum produced by Morgan Stanley, the adviser hired by Huawei, the unit is this year expected to report revenues of $3.5 billion and produce net profits of about $400 million.
The company was recently reported as aiming to increase its handset production to 50 million units per year. Huawei currently outsources its handset manufacturing to Thailand based Cal-Comp Electronics and Singapore headquartered Flextronics.
On the web: Wall Street Journal
Posted to the site on 1st October 2008
