Henry Tenby
January 7th, 2008, 08:18
Air China has upped efforts to buy a stake in China Eastern Airlines, saying it will pay more than a rival offer.
China Eastern shareholders meet on Tuesday to decide whether to accept a $923m (£467m) bid from Singapore Airlines and investment firm Temasek.
But Air China said it will pay at least five Hong Kong dollars per share for the 24% stake - well above the HK$3.80 offer currently on the table.
It promised a "strategic alliance" with China Eastern if the deal fell through.
Air China's parent firm, China National Aviation Corp Group (CNACG), already owns 12% of its rival's Hong Kong-listed shares.
It said it would reject the Singapore proposal - which has already won approval from the Chinese government - claiming it undervalued China Eastern.
"We believe that the CNACG proposal, which has the added advantage of supporting the cooperation of China's major airlines, will produce greater benefits to China Eastern Airlines than the Singapore Airlines proposal," it said.
"We strongly believe that the CNACG proposal will provide the necessary synergies and fully utilise the functions of all relevant parties in the development of Shanghai as an aviation hub."
The Chinese airline market has been experiencing significant growth, making a deal for part of China Eastern - which runs both domestic and international services - appealing.
Analysts say that many foreign carriers want to enter China but because the market is sealed off, they turn to buying stakes in domestic airliners.
Last year, Cathay Pacific pulled out of a move for the stake in China Eastern.
China Eastern shareholders meet on Tuesday to decide whether to accept a $923m (£467m) bid from Singapore Airlines and investment firm Temasek.
But Air China said it will pay at least five Hong Kong dollars per share for the 24% stake - well above the HK$3.80 offer currently on the table.
It promised a "strategic alliance" with China Eastern if the deal fell through.
Air China's parent firm, China National Aviation Corp Group (CNACG), already owns 12% of its rival's Hong Kong-listed shares.
It said it would reject the Singapore proposal - which has already won approval from the Chinese government - claiming it undervalued China Eastern.
"We believe that the CNACG proposal, which has the added advantage of supporting the cooperation of China's major airlines, will produce greater benefits to China Eastern Airlines than the Singapore Airlines proposal," it said.
"We strongly believe that the CNACG proposal will provide the necessary synergies and fully utilise the functions of all relevant parties in the development of Shanghai as an aviation hub."
The Chinese airline market has been experiencing significant growth, making a deal for part of China Eastern - which runs both domestic and international services - appealing.
Analysts say that many foreign carriers want to enter China but because the market is sealed off, they turn to buying stakes in domestic airliners.
Last year, Cathay Pacific pulled out of a move for the stake in China Eastern.
