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RECEIVED VA! MARIO7RY NO. 51
CONFIDENTIAL
GRS 650
CONFIDENTIAL
FM HONG KONG 140810Z FEBRUARY 80
TO PRIORITY F C O
TELEGRAM NUMBER 240 OF 14 FEBRUARY
INFO ROUTINE DO T
TAKEOVER OF FURNESS WITHY BY C Y TUNG GROUP
PA
MA20
No
REMR;
19/2:
1. MR C H TUNG, THE ELDER SON OF CY TUNG (WHO MR NOTT MET HERE AT DINNER), HAS AN APPOINTMENT WITH MR NOTT ON 25 FEBRUARY. THE OBJECT IS TO DISCUSS HIS FIRM'S TAKEOVER OF FURNESS WITHY AND
EXPLAIN THE BACKGROUND AND PURPOSE. THE DETAILS ARE ALREADY KNOWN TO MR NEIL BURTON OF THE OFFICE OF FAIR TRADING.
2. THIS PROJECT WOULD BE IN KEEPING WITH THE FIRM'S POLICY OF DEVELOPING THE UK/HONG KONG CONNECTION THROUGH INVESTMENTS
IN THE UK OF WHICH THE MOST RECENT HAS BEEN A DOLLARS 27 MILLION STAKE IN THE PORT OF FELIXTOWE FOR THE EXPANSION OF CONTAINER FACILITIES THERE THROUGH THE PURCHASE OF LARGELY BRITISH EQUIPMENT.
3. IF THIS DEAL GOES THROUGH MR TUNG WILL MAINTAIN THE BRITISH REGISTRY OF SHIPS AND BRITISH CHARACTER AND MANAGEMENT OF THEE FIRM. HE REALISES HOW UNDESIRABLE IT WOULD BE IF THERE WERE MISUNDERSTAND BY EITHER UNIONS OR MANAGEMENT ABOUT THE IMPLICATIONS OF THIS TAKEOVER BY A HONG KONG FIRM. HE PROPOSES TO MAKE THE FIRM'S POLICY CLEAR TO BOTH MANAGEMENT AND UNIONS IN A SERIES OF MEETINGS AND IS ALSO PREPARED TO GO ON PUBLIC RECORD. SINCE HIS PLANS INVOLVE EXPANSION AND INJECTION OF NEW CAPITAL, THE TAKEOVER COULD WELL BE IN THE INTERESTS OF THE COMPANY AND ITS EMPLOYEES.
4. MR TUNG WILL SEEK GUIDANCE FROM MR NOTT ON TWO POINTS:- A. WHETHER THE COMBINATION OF TUNG'S OTHER INTERESTS WITH FURNESS WITHY WILL RESULT IN REFENCE TO THE MONOLOPIES COMMISSION.
THE DETAILS OF POSSIBLE POINTS OF DIFFICULTY ARE KNOWN TO MR BURTON B. WHETHER, IN SPITE OF THE PROPOSED ACTION IN PARAGRAPH 3 ABOVE, THERE IS LIKELY TO BE A UNION REACTION WHICH WOULD BE FRUSTRATING TO TUNG'S INTERESTS AND COULD SPILL OVER INTO UK/HONG KONG COMMERCIAL RELATIONS.
CONFIDENTIAL
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