China Eastern, Shanghai Airlines merger moves closer
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China Eastern Airlines has said it will acquire rival Shanghai Airlines through a CNY8.9 billion (US$1.3 billion) share swap and raise CNY7 billion in a private share placement. According to a ChannelNewsAsia report, China Eastern, the country’s third largest carrier, will swap 1.3 of its shares for each share in Shanghai Airlines.
Under the terms of the deal, state-run China Eastern’s shares would be valued at CNY5.28 each while Shanghai Airlines’ 1.3 billion outstanding shares were valued at CNY6.875 apiece. As a result, the merger would be valued at CNY8.9 billion.
Shanghai Airlines will become a wholly-owned subsidiary of China Eastern, creating an aviation company with a dominant position in the Shanghai market. China Eastern said the deal would increase its market share in the city’s passenger transport market to 46.6% from the current 32.1%.
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