Tycoon Richard Li said he is almost selling fiber to traders in China

(Bloomberg) — PCCW Ltd., a telecommunications group controlled by Hong Kong tycoon Richard Li, is in advanced talks to sell a significant minority stake in its fiber business to China Merchants Group Ltd., according to people familiar with the matter .

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PCCW is close to selling 40% of its fiber unit to the Chinese state-owned conglomerate for $850 million to $900 million, said the people, who asked not to be identified because the discussions are private. PCCW and China Merchants are finalizing details and an announcement could be made in the coming weeks, the people said.

Financing has been planned for the deal, which could be done through private equity unit China Merchants Capital, the people said. The stake sale would help PCCW raise money and expand the fiber business, they said.

PCCW’s American Depositary Receipts rose as much as 5.3% following the Bloomberg News report on the possible sale, the biggest jump since March 5. Hong Kong-listed PCCW shares rose as much as 1.8% when trading began on Wednesday, also the biggest gain in two months. The Hang Seng Index was little changed.

Negotiations are ongoing and could still face delays or collapse, the people said.

A PCCW representative declined to comment. China Merchants Capital did not respond to a request for comment.

China Merchants has been considering bidding for a stake in the fiber business after negotiations between PCCW and Abu Dhabi’s sovereign wealth fund for the assets collapsed, Bloomberg News reported in March.

China Merchants traces its roots to 1872 and has businesses ranging from ports, transport and finance to property and healthcare.

(Updates with share price movements in fourth paragraph.)

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