Singapore Airlines (SIA) and Singapore Government investment arm Temasek Holdings have agreed to acquire 24% of China Eastern Airlines in a $916 million deal.
The widely expected buy-in was confirmed yesterday at an event in Shanghai, where China Eastern is based. China Eastern’s shares have been suspended from trading since 22 May as Chinese Government approval was being sought.
Star Alliance carrier SIA says in a statement that it will buy 1.23 billion new China Eastern shares, at $0.49 each, for $602.7m, giving it 15.7%. Temasek, which is SIA’s majority owner, will buy 649 million new shares for $320m, giving it 8.3%.
China Eastern’s parent company, China Eastern Air Holding, will also acquire 1.1 billion new shares for around $539m to maintain a majority stake of 51%.
SIA has long been seeking to expand its reach in China and China Eastern is one of the country’s ‘big three’ airline groups, after Beijing-based Air China and Guangzhou-based China Southern Airlines.
China Eastern has been accused by some shareholders of not acting quickly enough to restructure its operations and was the only one of China’s main airline groups not to have reported profits for the first half to June, although it recently reported a sharp reduction in net losses for the period.
It is also the only one of the big three not to have committed to joining a multilateral alliance. Air China is due to join the Star Alliance later this year while China Southern is to join SkyTeam in the coming months.
Asian Aerospace homepageSource: Flight Daily News
