Cathay Pacific Airways' plan to expand its limited presence within China by taking full control of fellow Hong Kong-based carrier Dragonair and doubling its stake in Air China have moved a step forward after shareholder approval was secured last week.
Shareholders in Cathay as well as key shareholders in Dragonair, China National Aviation (CNAC) and CITIC Pacific gave approval at separate extraordinary general meetings. Shareholders of Air China, which owns CNAC, also cleared the deal.
Approval comes 10 weeks after tentative agreement was reached with shareholders of privately owned Dragonair and Air China.
Once all legal documentation has been signed, Cathay will have purchased the 82.2% of Dragonair that it did not already own for HK$8.22 billion ($1.1 billion). The shares are currently held by CNAC, fellow China-backed company CITIC Pacific, Cathay's biggest single shareholder Swire Pacific, and a handful of minority shareholders.
Air China and CNAC will acquire a combined 17.5% of Cathay from CITIC and Swire for HK$5.4 billion, while Cathay will be doubling its stake in Air China to 20% for HK$4.1 billion.
Swire will continue to manage Cathay, with its stake reduced to 40%, while CITIC's stake in Cathay is reduced to 17.5%. Dragonair, which makes most of its money from services in China, will operate under its own brand for at least six years, under Cathay management.
Source: Flight International
