Singapore buys $918m stake in China Eastern Air
Singapore Airlines and its parent Temasek will pay $918 million for a combined 24 per cent stake in China Eastern Airlines.world Updated: Sep 02, 2007 12:21 IST
Singapore Airlines and its parent Temasek will pay $918 million for a combined 24 per cent stake in China Eastern Airlines, in the first purchase by foreigners of a major, strategic stake in a top Chinese airline.
The deal, approved by the Chinese government last month, may herald more tie-ups in China's booming aviation sector as Beijing seeks to make the industry globally competitive.
Singapore Airlines and Temasek, a Singapore government-owned investment firm, will buy new Hong Kong-listed H shares in China Eastern at a price of HK$3.80 each, the Chinese airline announced on Sunday.
China Eastern will also raise $536 million by issuing H shares at the same price to its own state parent. The combined issues, accounting for 38 percent of its expanded share capital, will leave China Eastern 51 per cent owned by its Chinese parent.
The HK$3.80 price of the shares represents a 1.9 per cent premium to the last closing price of China Eastern's stock in Hong Kong -- but a massive 62 per cent discount to the last close of the airline's Shanghai-listed A shares.
The shares have been suspended in both markets since May 22 pending announcement of the deal. China's bullish stock market has bid the prices of many domestically listed shares far above their foreign-listed counterparts. ($1 = 7.54 yuan) ($1 = HK$7.8)