China Eastern acquires Shanghai Airlines for $1.3 billion
13 Jul 2009
China Eastern Airlines Corp Ltd, the country's third-largest airline, announced yesterday that it will merge Shanghai Airlines Co Ltd, another major player, through a shares swap deal valued at 8.9 billion yuan ($1.3 billion).
The deal envisages exchange of 1.3 shares of China Eastern for every 'A' share of Shanghai Airlines in addition to giving about 25 per cent risk premium to Shanghai's shareholders. A statement filed to the Shanghai Stock Exchange by China Eastern said.
Further, China Eastern will sell up to 1.35 billion yuan-denominated 'A' shares to 10 institutional investors for no less than 4.75 yuan each, and up to 490 million HK$-denominated 'H' shares to a wholly owned unit of China Eastern in Hong Kong for no less than HK$1.4 per share.
The company said that it will raise around 7 billion yuan additionally through a sale of new 'A' shares and 'H' shares.
Shareholders of both the companies, who do not want to go in for a share swap will be given a cash option, the statement said.
The deal may close in four to five months, as indicated by Shanghai Airlines chairman Zhou Chi a few days ago.
Liu Jingbo, spokesman of the working team supervising the take-over said the merger between the two air carriers is a major step to promote consolidation of regional airlines and to facilitate building Shanghai into an international hub.
Further to the unification, Shanghai Airlines will become a wholly-owned subsidiary of China Eastern with both the companies retaining their brands and independent operations, Liu said.
