[photopress:air_china_eastern_problem.jpg,full,alignright]This is getting to be like a bad soap opera. Air China managed to intervene and keep China Eastern being partly owned by Singapore Airlines. It did this by raising on the SIA offer so that SIA withdrew.
Technically it was Air China’s parent company, CNAC, which approached China Eastern Airlines offering to buy up to 30% of its smaller, less profitable rival in a bid that was 30% higher than that made by SIA.
At which point that battle appeared to be over. It was not.
China Eastern responded to the approach by publicly questioning its validity and sincerity and saying it did not regard the offer as a formal proposal.
China National Aviation, Air China’s parent, said its ‘suggestion letter’ had all the necessary ingredients of a formal proposal and that it was a legal quibble. Each side accused the other of game playing and manipulation.
Both China Eastern and Air China’s shares dropped by the 10% limit in Shanghai while in Hong Kong China Eastern’s fell almost 12% and Air China’s 20%.
Since when Air China has regained some of those losses but China Eastern’s shares have falled more than 6%.
Air China’s parent company, CNAC maintains it just wants to sit down and talk to China Eastern, which says it still wants a deal with SIA, which says it will not raise its bid.
Stay tuned to this station.
Source: Financial Times
