Huawei's plan to raise $2 billion by selling a majority stake in its mobile equipment unit to a foreign buyer has been put on hold.
The Shenzhen-based telecommunications equipment maker had engaged Morgan Stanley to find a strategic partner to buy the unit, but bankers said the turmoil in the financial markets has made it difficult to compete a deal at this time.
Reports say two U.S. private equity firms, Bain Capital and Silverlake Partners, had offered bids but that they were around 25 percent below Huawei's expectations.
OnWednesday, Huawei announced it was putting off the sale in light of “current
global market conditions and prevailing economic uncertainty.” The company indicated it might
put the unit back on the market in the future.
The setback indicates that Asia is now fully in the throes of the uncertainty that have gripped the world's financial markets. A deal with Huawei was one of the few opportunities left for the big private equity firms like Bain and Silverlake to place a large amount of money in one deal.
Another deal involving Morgan Stanley failed last year when Huawei tried to sell its 49% stake in a joint venture with 3Com. Bain then tried to buy all of 3Com in a $2.2 billion deal and brought Huawei in as a strategic partner. A U.S. government review of the technology 3Com provides to the U.S. government eventually led to abandonment of the deal.
Huawei was founded in 1988 and has become an international player, selling cutting-edge telecom equipment at lower prices than European and North American competitors. It now sells to most of the top telecom operators around the world.