Singapore Airlines Isn’t Revising China Eastern Bid
Singapore Airlines Ltd. is not considering revising its proposal to buy a stake in China Eastern Airlines Corp. to win over shareholders of the Chinese carrier, said Chief Executive Officer Chew Choon Seng.
Singapore Air doesn’t plan to change the terms of the HK$7.16 billion ($918 million) offer, made previously with parent Temasek Holdings Pte, for a 24 percent stake in Shanghai-based China Eastern, Chew said in an interview in Singapore late yesterday.
“At this point we put on the table what we put on the table and that’s it,” Chew said. “We have our own criteria and our own business plans.”
Failure to buy the stake in China Eastern limits Singapore Air’s access to the world’s second-largest aviation market and its ability to challenge the dominance of Air China Ltd. and its affiliate Cathay Pacific Airways Ltd. A higher price may help the carrier win over shareholders who rejected the Singapore proposal Jan. 8, analysts and investors have said.
“If Singapore Air is serious about China Eastern, they will need to offer something more,” said Derek Sadubin, chief operating officer of the Sydney-based Centre for Asia-Pacific Aviation, which advises airlines. “China Eastern presents a key part of the future for Singapore Air and this is a fantastic opportunity to cement a foothold in that market.”
Minority Shareholders
Minority shareholders of China’s third-biggest carrier vetoed the offer by the Singapore investors on Jan. 8, two days after China National Aviation Holding Co., the parent of Air China, pledged to offer a higher counter-bid.
Singapore Air and Temasek agreed to buy new China Eastern shares at HK$3.80 apiece last September. That’s a 24 percent discount to China National’s pledge of at least HK$5 a share and 35 percent lower than Friday’s closing price of HK$5.85.
The offer was the “maximum justified by the business fundamentals,” Singapore Air spokesman Stephen Forshaw said in an e-mail reply to Bloomberg queries on Feb. 14.
“As to the timing and process of submitting the proposal back to shareholders in the future, this is really a matter for China Eastern to determine in due course,” Forshaw said.
China Eastern, which had said it will continue to pursue cooperation with Singapore Air, cannot consider other offers between now and August, because of an “exclusivity” clause that was included in the bid by the Singapore investors, according to a note to shareholders.
Singapore Air rose 1 percent to S$15.98 as of 9:04 a.m. in Singapore.
Tags: Airways, Aviation, China-Eastern-Airlines, port