CNAC said when the company prescribed its bidding price, it took into consideration CEA financial status and the possible collaboration effect of the proposed alliance between the two airlines.
CNAC believed upon the implementation of the proposal, CEA's financial situation would be improved and operation of both companies would be optimized.
On Jan. 21, CEA disclosed details of CNAC's alliance proposal, which it said it received on Jan. 18. The Hong Kong-based CNAC is the wholly-owned subsidiary of China National Aviation Holding Co.(CNAHC), parent of Air China Ltd.
On Jan. 8, CNAC successfully blocked 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 the Singapore government investment arm Temasek Holdings.
Minority shareholders believed the offer of 3.80 H.K. dollars (49 U.S. cents) per share failed to reflect CEA's fair value. CNAC also accused the deal of being unfair to other shareholders and domestic airlines as it included anti-dilution rights and a non-competition clause.
In the proposal, CNAC said it offered to buy with China Eastern Group its listed arm's 2.98 billion H shares at a price of no lower than 5 H.K. dollars a share.
Air China, the Beijing-based flagship carrier, would help CEA facilitate construction of a Shanghai aviation hub, and optimise its air routes network and operation of the Pudong and Hongqiao airports, according to the proposal.
