Hong-Kong-based Cathay Pacific Airways Ltd plans to invest in
China Eastern Airlines Corp, in a move that could derail rival
Singapore Airlines Ltd's deal to acquire a stake in the mainland
carrier, according to today's Nanfang Daily citing a report
from Channel News Asia.
The UK's Daily Telegraph, citing South China Morning
Post, said that the Cathay bid for a large stake in China
Eastern is worth US$4 billion.
Cathay's move, which will build on Air China's existing 11
percent stake in China Eastern, is expected to trigger a bidding
war over the routes owned by China's third-largest carrier.
Sources close to Temasek Holdings Pte Ltd, an investment arm of
the Singapore government helping Singapore Airlines with its bid
for a 24 percent stake for US$923 million, said it would
"inevitably" respond to any blocking move by Cathay.
Singapore Airlines agreed early this month to buy a 15.7 percent
stake in Shanghai-based China Eastern, whose share price has more
than doubled in the past month. Temasek Holdings agreed to
simultaneously buy an additional 8.3 percent of China Eastern
shares.
It remains unclear as to how far Cathay can go with its bid.
South China Morning Post said the Cathy bid must first be
approved by two thirds of its stock holders, and sources close to
the situation said the bid is still uncertain.
China Eastern gained as much as 8 percent to HK$10.50 and
changed hands at HK$9.75 at the 12:30 p.m. trading break in Hong
Kong, on course for its seventh consecutive day of gains. Singapore
Airlines declined to its lowest in a month. Cathay Pacific and Air
China, which own stakes in each other, have halted their shares
pending announcements.
(Chinadaily.com.cn September 24, 2007)
