CNAC invites China Eastern to talk about possible co-op

BEIJING—After two days of silence, China National Aviation Corp (Group) (CNAC) has responded to China Eastern Airlines’ (CEA) rejection of its offer to buy into the Shanghai-based carrier.
A CNAC source said on Monday the company “has always been sincere about the possible establishment of a strategic partnership with CEA, and hopes the CEA board to study the proposal earnestly and consider it prudently”.
Observers believed CEA’s rejection could close the door for an alliance between CEA and Air China, the country’s number three and number two carriers, respectively, by fleet size.
Responding to the rejection, CNAC said in a statement the reason why the CEA board made such a decision was that the two sides had not yet had the chance to hold wide-ranging and deep discussions on the bid.
CNAC invited CEA to discuss every detail of the proposed equity cooperation so as to finalize the related scheme.
A source with the board of CEA’s listing arm said earlier that it “is willing to study any sincere bid that conforms with legal procedures and is better than Singapore Airlines offer”.
But in a statement released last Tuesday CEA said, “In the whole process of proposal-making and with the communications method, CNAC has never showed any sincerity and deep and thorough planning for our cooperation”.
CNAC said when the company prescribed its bidding price, it took into consideration CEA financial status and the possible collaboration effect of the proposed alliance between the two airlines.
CNAC believed upon the implementation of the proposal, CEA’s financial situation would be improved and operation of both companies would be optimized.
On January 21, CEA disclosed details of CNAC’s alliance proposal, which it said it received on January 18. The Hong Kong-based CNAC is the wholly-owned subsidiary of China National Aviation Holding Co (CNAHC), parent of Air China Ltd.
On January 8, CNAC successfully blocked CEA’s proposed sale of 1.88 billion H shares, or a 24 percent stake, to Singapore Airlines (SIA) and Lentor Investments, a unit of the Singapore government investment arm Temasek Holdings.
Minority shareholders believed the offer of HK$3.80 (49 US cents) per share failed to reflect CEA’s fair value. CNAC also accused the deal of being unfair to other shareholders and domestic airlines as it included anti-dilution rights and a non-competition clause.

— Xinhua