Cathay eyeing China Eastern Airlines stake -WSJ
CATHAY PACIFIC Airways Ltd. is looking to invest in China Eastern
Airlines Corp. , a move that could derail rival Singapore Airlines
Ltd.'s deal to acquire a stake in the mainland carrier, according to
newspaper reports.
The UK's Daily Telegraph said Cathay was expected to announce a bid
this week for a large stake in China Eastern , which has a market value
of nearly $12 billion.
The Wall Street Journal, quoting a person familiar with the
situation, said Cathay would announce plans to acquire a stake in China
Eastern after the Hong Kong market closes on Monday. Neither the
Telegraph nor the Journal specified the size of the stake.
Trading in shares of Cathay Pacific was suspended on Friday after
they jumped 12 percent to a record high of HK$23.05 on Friday morning on
speculation that China would soon kick off a wide-ranging overhaul of
its ailing airline sector.
Cathay could not be immediately reached for comment on Monday, but
said on Friday it had requested the trade suspension pending the release
of news on a proposed transaction.
Singapore Airlines (SIA) agreed early this month to buy a 15.7
percent stake in Shanghai-based China Eastern, whose share price has
more than doubled in the past month.
Singapore Airlines' parent, Temasek Holdings Pte. Ltd., agreed to
simultaneously buy an additional 8.3 percent of China Eastern. Buying a
large stake in China Eastern could benefit Cathay by blocking SIA from
grabbing market share on lucrative routes across the world's
fourth-largest economy - Hong Kong-based Cathay's backyard.
Air travel is booming in China, fuelled by double-digit economic
growth and growing outbound and inbound travel. But the country's
airlines had bled losses for years, pummelled by climbing oil prices.
Brokers said speculation had flared anew in the run-up to China's
October Communist Party congress that officials might choose to
kick-start a long-expected sector overhaul, which some think would
involve mergers or acquisitions.
Reuters |
