Air China raises Cathay Pacific stake
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Air China will spend HK$6.3 billion (US$813 million) to raise its stake in Cathay Pacific Airways, after failing to seal an agreement with an airline in Shanghai, Bloomberg has reported. Air China will increase its Cathay holding to 29.99% by buying 491.9 million shares for HK$12.88 each from CITIC Pacific, according to a stock exchange statement yesterday. Swire Pacific will also purchase HK$1 billion of Cathay shares from CITIC at the same price. Swire will remain Cathay’s largest shareholder, holding 42% of equity in the carrier.
Beijing-based Air China will boost its stake in Cathay from 17.5% after efforts to build a Shanghai hub were quashed by China Eastern Airlines’ planned takeover of Shanghai Airlines. Cathay may benefit from closer ties with China’s second-largest carrier as the country has avoided a global slump in air travel because of a government economic stimulus package.
Air China and Swire both bought as much of Cathay as they could without triggering mandatory takeover offers, according to Cathay Chairman, Christopher Pratt. The sale talks were “very speedy,” he said, adding that CITIC would likely hold on to its remaining 3% stake in Cathay. Air China will take over two Cathay director seats held by CITIC, but will not appoint any managers to the Hong Kong carrier, the report added.
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