Shanghai/Hong Kong: China Eastern Airlines shareholders have turned down a offer by Singapore International Airlines and its investment arm Temasek Holdings to buy a 24 per cent stake in the struggling carrier for $920 million. The contentious bid will now see bigger mainland rival, Air China, make a bid for the country's third-largest carrier.
Industry analysts say that it is likely that China Eastern may return to the negotiating table with Singapore Airlines and Temasek in order to get a better deal for the shareholders. Air China majority shareholder, CNAC, had skewed the whole deal with a counter offer which was at least 30 per cent higher than that offered by Singapore Air and Temasek.
Singapore Air and Temasek had defended their offer bid as being fair, given the losses already suffered by China Eastern. The airline has made losses in three of the past five years. Singapore Air and China Eastern insisted their agreed deal was fair at six times the airline's end-2006 book value.
CNAC had argued that the bid was grossly undervalued and promised to make a much higher offer within two weeks of shareholders turning down Temasek and Singapore Airlines offer.
Singapore Airlines, the world's most profitable airline, said in a statement it was disappointed but would continue to build a relationship with China Eastern.