Highlights from the last week of China business news.
A deal fails to take off
Another deal gone bad for Temasek. Its plan to buy a chunk of China Eastern Airlines, in partnership with portfolio company Singapore Airlines, fell apart at the last minute this week. This was cunningly engineered by China National Aviation Holding Company, owner of rival firm Air China (and also a 12.07% owner of China Eastern). The deal-busters came in with an offer of HK$5 per share, which looked a lot better to China Eastern shareholders than the Singaporeans’ HK$3.80. So more than a third of the shareholders voted against the SIA-Temasek buy-in on January 8 at a meeting in Hongqiao, and the deal was off. The acquisition was already looking shaky after Air China partner Cathay Pacific nearly put in a bid in December, but SIA-Temasek looked to be on safe ground because they had the blessings of the State Council. In the end, savvy business skills put the kibosh on the bureaucrats’ plans. The Singaporean sovereign wealth fund and flagship airline, for all their capital and political connections, couldn’t figure a way past determined local opposition. Is a Singaporean counter-bid in the offing? Unlikely, but let’s hope it is – just to add another twist to this unusually entertaining acquisition saga.
Five hours by train from Shanghai to Beijing? Sign us up. And, apparently, sign China Development Bank and a Ping An Insurance-led consortium up too – for more than US$3 billion. Construction began on the Shanghai-Beijing high-speed railway this week, and the project attracted plenty of investor attention too. Ping An is leading a group of insurance companies to sink more than US$2 billion for 14% of the company that runs the railway, becoming the firm’s second-largest shareholder, behind the Ministry of Railways. China Development Bank, the policy lender that’s often saddled with funding unattractive, state-mandated projects but is supposed to be becoming more commercially oriented, could get a juicy reward if it succeeds in putting in US$1.37 billion into the project. The 1,318-km railway will be complete in five years and will surely be a hit with travelers weary of flight delays. Speaking of high-speed trains, whatever happened to the mainland-Hong Kong through-train scheme that caused such a stir when it was announced? We’re still waiting for that one to – forgive us – get back on track.
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