A stock exchange source last week warned that an on-line gambling business was unlikely to gain regulatory approval, as casino gambling was illegal in Hong Kong.

China Sci-Tech is to buy three billion COL shares at 28 cents a share, a premium of about 9.8 per cent to the closing price on October 20, its last day of trading before the stock was suspended. The price is a 344 per cent premium to COL's unaudited consolidated net tangible asset value of 6.3 cents per share. China Strategic, which has a 47.07 per cent stake in COL, has agreed to sell the rest of its stake to persons not connected with it or China Sci-Tech immediately following completion of the deal.

Cash-rich COL, formerly known as Star Telecom, reaped a $440 million exceptional gain from the sale in May of 400 million shares in Pacific Century CyberWorks, its former subsidiary Tricom Holdings. COL still holds 200 million shares in CyberWorks and China Strategic has given a warranty that these will still be included in the assets of COL at completion of the deal. The deal is subject to various conditions.