Air China's parent company China National Aviation (CNAC) is preparing a counter offer for China Eastern Airlines after successfully blocking a proposed buy-in by Singapore Airlines.
The buy-in offer, which could become a hostile takeover attempt, is expected by the week of 21 January and is likely to involve Hong Kong's Cathay Pacific Airways, which has cross-shareholding ties with Air China.
CNAC is seeking to expand the Beijing-based carrier's presence in the important Shanghai market, where China Eastern is based, and last week it managed to convince minority shareholders to vote down a proposed buy-in by SIA and Singapore government investment arm Temasek Holdings.
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SIA and Temasek in September agreed to acquire 24% of China Eastern in a deal supported by the carrier's board and approved by the Chinese government. But CNAC for months lobbied government officials for support to attempt to derail it.
It succeeded on 8 January when minority shareholders voted overwhelmingly against the SIA and Temasek bid. Approval was needed from at least 66% of minority shareholders but 78% of those voting rejected it, hoping for a higher offer from CNAC.
CNAC promised within two weeks to make a rival offer for at least HK$5 (¢64) per share, or around one third more than the HK$3.80 being offered by SIA and Temasek.
China Eastern said it would not consider any offer from CNAC or Air China, however, and insisted SIA was its best partner. China Eastern is the weakest of China's major airlines and its SIA deal was widely seen as a defensive move to make it tougher for a stronger airline such as Air China to acquire it.
China Eastern chairman Li Fenghua said after the extraordinary general meeting that rejected the SIA bid that he favoured: "China Eastern and Air China are at the same level in terms of operation, management and market performance, so we will not consider introducing Air China as our strategic partner no matter how high the price they can offer."
Source: FlightGlobal.com
