0744 GMT [Dow Jones] China Eastern Airlines (0670.HK) falls more, now down 11.4% at HK$6.63, likely hurt by Chairman Li Fenghua says deal to sell 24% stake to Singapore Airlines (C6L.SG), Temasek at HK$3.80/share was only deal available, price wouldn’t be raised. Li’s word may quash investor expectations of possible counter-bid from Air China (0753.HK) parent, Cathay Pacific (0293.HK). Li says clearly that Beijing views deal as being in China’s national interest; "we don’t believe Air China will vote against the deal ... they have to know who the boss is," Li says. Such strong words will almost certainly take out most of bidding war premium embedded in CEA shares, though how much that premium is, difficult to estimate. Fall now takes stock to below 10-, 20-, 50-day moving averages; support may have to come from psychological HK$6.
China Eastern says partnership with Singapore Airlines, Temasek ‘only option’
HONG KONG (XFN-ASIA) - China Eastern Airlines president Li Fenghua said today that the proposed strategic partnership with Singapore Airlines and Temasek is the ‘only and ultimate option’ to further its restructuring plans.
Singapore Airlines and Temasek, the investment arm of the Singapore government, reached an agreement with China Eastern in early September to buy a combined 25 pct stake in the airline at 3.80 hkd per share in a deal which won the approval of China’s authorities and China Eastern management.
However, speculation about a combined counter bid by Air China and Cathay Pacific as well as the doubling of China Eastern’s share price to above 7.50 hkd recently has cast doubt on the deal.
The deal, a result of prolonged discussions between different government agencies, has been approved by the State-owned Assets Supervision and Administration Commission of the State Council - China Eastern’s controlling shareholder - Li told reporters at a press briefing here today.
‘I am confident the deal will be approved at the shareholders meeting on Jan 8 ‘, he said.
The deal is meant to enhance the competitiveness of China’s airline industry, and takes into account the benefits for consumers, Li said, adding that the deal is more of a government transaction than a corporate action.
‘I do not see the possibility of a ‘no’ vote by shareholders, including China National Aviation Holding Co’, he said.
If the deal falls through however, he said that China Eastern will continue to table new proposals through a similar arrangement and asking price until the deal is ultimately approved by shareholders.
Li added that he hopes that China Eastern will be able to raise its market share in Shanghai to above 50 pct from the current 36 pct through future co-operation with Singapore Airlines. But he did not give a specific timetable.
He also said he is optimistic on China Eastern’s full-year earnings, and believes it will do better next year.
In late September, Air China and Cathay Pacific abandoned a plan to thwart Singapore Airlines’ attempt to buy a stake in China Eastern.
China Eastern closed down 0.95 hkd or 12.70 pct today at 6.53 hkd.
China Eastern chairman confident SIA deal will go through
Chances of share sale sinking are not high, perhaps even zero, says Li Fenghua
By Vince Chong
CHINA Eastern Airlines' plan to sell stakes to Singapore Airlines (SIA) and Temasek Holdings will not be scuppered because 'there is only one boss' whose word is final.
China Eastern's chairman, Mr Li Fenghua, gave that assurance yesterday as he referred to the mainland government as the 'boss'.
'Chances of the deal failing are not high, perhaps even zero,' said Mr Li in the clearest sign yet that the high-profile tie-up would be approved at a shareholders' meeting next month. 'You must be very clear on who the 'big boss' is.'
At a press conference, Mr Li said he found it necessary to use colourful terms - such as 'boss' and 'children' - to refer to state-owned airlines to state his case, as he 'had never expected speculation over the deal to be so intense in Hong Kong'.
China Eastern, SIA and Temasek are presenting a roadshow to investors ahead of the Jan 8 meeting.
China Eastern's parent, CEA Holdings, owns 57 per cent of the airline and needs just 9 per cent more to hit the 66 per cent threshold needed to have the deal successfully voted through. This will give SIA access to China's lucrative aviation network out of China Eastern's Shanghai base.
Still, speculation has been rife that China National Aviation Corp (CNAC) - parent of the bigger state-owned Air China - will try to unite minority shareholders in a bid to block the tie-up.
In September, CNAC and Hong Kong's Cathay Pacific Airways also considered - and rejected - a counterbid for China Eastern.
China Eastern aims to sell a 24 per cent stake to SIA and its parent, Temasek, for HK$7.2 billion (S$1.33 billion), which prices the airline's shares at HK$3.80 each.
The share price has since risen by over 80 per cent, though it fell 12.7 per cent to finish at HK$6.52 yesterday, after Mr Li's comments cast doubts over a possible Air China counterbid.
SIA chief executive Chew Choon Seng said on Wednesday that SIA would not enter into a price war with Air China should the current deal fail.
'Sometimes, a 'child' can be naughty,' Mr Li said, drawing laughter from his audience, referring to Air China's reported plan to bid for China Eastern.
'I can understand why, as a company, they might want to do it... (But) the big picture must rule over the smaller one.'
China's aviation industry, he said, must continue to internationalise and bring in global expertise in order to develop and progress.
'A deal with an airline considered to be the best in the world is best for the long term,' he added.
'I would not be sitting here telling you this if the 'boss' had not given the go-ahead.'
3 comments:
2007/12/13
0744 GMT [Dow Jones] China Eastern Airlines (0670.HK) falls more, now down 11.4% at HK$6.63, likely hurt by Chairman Li Fenghua says deal to sell 24% stake to Singapore Airlines (C6L.SG), Temasek at HK$3.80/share was only deal available, price wouldn’t be raised. Li’s word may quash investor expectations of possible counter-bid from Air China (0753.HK) parent, Cathay Pacific (0293.HK). Li says clearly that Beijing views deal as being in China’s national interest; "we don’t believe Air China will vote against the deal ... they have to know who the boss is," Li says. Such strong words will almost certainly take out most of bidding war premium embedded in CEA shares, though how much that premium is, difficult to estimate. Fall now takes stock to below 10-, 20-, 50-day moving averages; support may have to come from psychological HK$6.
China Eastern says partnership with Singapore Airlines, Temasek ‘only option’
HONG KONG (XFN-ASIA) - China Eastern Airlines president Li Fenghua said today that the proposed strategic partnership with Singapore Airlines and Temasek is the ‘only and ultimate option’ to further its restructuring plans.
Singapore Airlines and Temasek, the investment arm of the Singapore government, reached an agreement with China Eastern in early September to buy a combined 25 pct stake in the airline at 3.80 hkd per share in a deal which won the approval of China’s authorities and China Eastern management.
However, speculation about a combined counter bid by Air China and Cathay Pacific as well as the doubling of China Eastern’s share price to above 7.50 hkd recently has cast doubt on the deal.
The deal, a result of prolonged discussions between different government agencies, has been approved by the State-owned Assets Supervision and Administration Commission of the State Council - China Eastern’s controlling shareholder - Li told reporters at a press briefing here today.
‘I am confident the deal will be approved at the shareholders meeting on Jan 8 ‘, he said.
The deal is meant to enhance the competitiveness of China’s airline industry, and takes into account the benefits for consumers, Li said, adding that the deal is more of a government transaction than a corporate action.
‘I do not see the possibility of a ‘no’ vote by shareholders, including China National Aviation Holding Co’, he said.
If the deal falls through however, he said that China Eastern will continue to table new proposals through a similar arrangement and asking price until the deal is ultimately approved by shareholders.
Li added that he hopes that China Eastern will be able to raise its market share in Shanghai to above 50 pct from the current 36 pct through future co-operation with Singapore Airlines. But he did not give a specific timetable.
He also said he is optimistic on China Eastern’s full-year earnings, and believes it will do better next year.
In late September, Air China and Cathay Pacific abandoned a plan to thwart Singapore Airlines’ attempt to buy a stake in China Eastern.
China Eastern closed down 0.95 hkd or 12.70 pct today at 6.53 hkd.
China Eastern chairman confident SIA deal will go through
Chances of share sale sinking are not high, perhaps even zero, says
Li Fenghua
By Vince Chong
CHINA Eastern Airlines' plan to sell stakes to Singapore Airlines (SIA) and Temasek Holdings will not be scuppered because 'there is only one boss' whose word is final.
China Eastern's chairman, Mr Li Fenghua, gave that assurance yesterday as he referred to the mainland government as the 'boss'.
'Chances of the deal failing are not high, perhaps even zero,' said Mr Li in the clearest sign yet that the high-profile tie-up would be approved at a shareholders' meeting next month. 'You must be very clear on who the 'big boss' is.'
At a press conference, Mr Li said he found it necessary to use colourful terms - such as 'boss' and 'children' - to refer to state-owned airlines to state his case, as he 'had never expected speculation over the deal to be so intense in Hong Kong'.
China Eastern, SIA and Temasek are presenting a roadshow to investors ahead of the Jan 8 meeting.
China Eastern's parent, CEA Holdings, owns 57 per cent of the airline and needs just 9 per cent more to hit the 66 per cent threshold needed to have the deal successfully voted through. This will give SIA access to China's lucrative aviation network out of China Eastern's Shanghai base.
Still, speculation has been rife that China National Aviation Corp (CNAC) - parent of the bigger state-owned Air China - will try to unite minority shareholders in a bid to block the tie-up.
In September, CNAC and Hong Kong's Cathay Pacific Airways also considered - and rejected - a counterbid for China Eastern.
China Eastern aims to sell a 24 per cent stake to SIA and its parent, Temasek, for HK$7.2 billion (S$1.33 billion), which prices the airline's shares at HK$3.80 each.
The share price has since risen by over 80 per cent, though it fell 12.7 per cent to finish at HK$6.52 yesterday, after Mr Li's comments cast doubts over a possible Air China counterbid.
SIA chief executive Chew Choon Seng said on Wednesday that SIA would not enter into a price war with Air China should the current deal fail.
'Sometimes, a 'child' can be naughty,' Mr Li said, drawing laughter from his audience, referring to Air China's reported plan to bid for China Eastern.
'I can understand why, as a company, they might want to do it... (But) the big picture must rule over the smaller one.'
China's aviation industry, he said, must continue to internationalise and bring in global expertise in order to develop and progress.
'A deal with an airline considered to be the best in the world is best for the long term,' he added.
'I would not be sitting here telling you this if the 'boss' had not given the go-ahead.'
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