China Eastern discloses details of alliance proposal
Updated: 2008-01-21 15:41
China Eastern Airlines Corp (CEA) disclosed on Monday details of a wide-ranging alliance proposal from China National Aviation Corp (Group) (CNAC).
On January 8, minority shareholders rejected CEA's proposed sale of 1.88 billion H shares, or a 24 percent stake, to Singapore Airlines (SIA) and Lentor Investments, a unit of Singapore Government Investment Company Temasek Holdings.
The Hong Kong-based CNAC, the wholly-owned subsidiary of China National Aviation Holding Co (CNAHC), parent of Air China Ltd, fulfilled its promise by making the offer within two weeks of the rejection.
In the proposal, CNAC said it offered, as it stated on January 7, to buy with China Eastern Group its listed arm's 2.98 billion H shares at a price of no lower than five Hong Kong dollars (64 US cents) a share. It noted the final price relied on consultations among related parties and it has no intention to take 30 percent or more CEA stake.
The price was 32 percent higher than SIA's offer of HK$3.80 per share, which CNAC regarded as not reflecting CEA's fair value. It has also accused the deal of being unfair to other shareholders and domestic airlines as it included anti-dilution rights and a non-competition clause.
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