China Eastern Airlines yesterday said China National Aviation
Corp's comments on the proposed sale of shares to Singapore
Airlines and Temasek "lacked objectivity".
A two-page statement by China Eastern said China National
Aviation is China Eastern's competitor and that although it is also
a major shareholder, China National Aviation's concern is not
representative of that of other shareholders.
The parent company of Air China, China National Aviation, which
owns a 12.07 percent stake in China Eastern, said on Monday that
the offer by Singapore Airlines Ltd for a stake in China Eastern
did not reflect a fair value of the Shanghai-based airline, and
that it reserved the right to make a counter-proposal. It requested
China Eastern and the bidders to present a better proposal.
China Eastern stressed the company has not received any similar
proposal from other suitors.
China Eastern also pointed out that the sale price of HK$3.8 per
share is reasonable because it is a result of long-term
negotiations with the buyers. The price represents a 35.7 percent
premium on the average H-share price from April 22 to May 21.
According to statistics from Tebon Securities, HK$3.8 is 31.93
times the company's expected 2007 annual earnings per share, higher
than Air China's P/E of 28 and China Southern Airline's 24.9, based
on their respective share prices on December 11.
Gao Jianming, a Beijing-based spokesman from China National
Aviation, was quoted by Bloomberg as saying the company would offer
what the current deal is lacking. "We believe other minority
shareholders will also vote against the deal," said Gao.
Analysts said many investors are hoping to gain from a much
higher price that Air China may offer.
"China National Aviation's latest comments are expected to
persuade many minority shareholders to vote against the proposal,"
said Xia Fulu, an analyst at Industrial Securities.
China National Aviation said in a previous statement that the
conditions China Eastern granted to Singapore Airlines and Temasek
Holdings are unfair to minority shareholders and are thus deemed to
have the effect of obstructing the development of the industry.
(China Daily January 4, 2008)
