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China flagship carrier Air China Ltd. plans to buy the shares of China National Aviation Co. Ltd. (CNAC) at a cost of HK$3.2 billion, Friday's Shanghai Securities News reported.
Air China Ltd., which already owns 68.4 percent of Hong Kong-listed CNAC, will offer HK$2.8 per share in a buy-back of all outstanding CNAC shares, the newspaper reported. The paper cited Rao Xinyu, a manager of investment with Air China Ltd., as saying that the buy-back is expected to be completed by the fourth quarter of this year.
The deal is the latest development in a series of takeovers and restructuring moves involving a number of airlines.
CNAC will sell its 43.3-percent stake in the Hong Kong Dragon Airlines Ltd. to Cathay Pacific Airways Ltd. Cathay will double its stake in Air China to 20 percent.
The deal will also mean that Air China will inherit CNAC's 7.34-percent stake in Cathay Pacific which will increase Air China's stake from 10.16 percent to 17.5 percent in Cathay Pacific.
Rao said the buyout will benefit smaller shareholders of CNAC.
CNAC closed at HK$2.625 on June 21, up 33.2 percent since Air China Ltd. announced its intention to buy back CNAC on June 9.
Rao said Air China Ltd. has no plan to adjust the structure and personnel posts of CNAC.
(Xinhua News Agency June 23, 2006)
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