CEA-SIA surprise: Competing offers cannot be considered until August
14 January 2008
China Eastern has said that a lock-up clause in their agreement with Singapore International Airlines and its parent, Temasek Holdings, prevents it from considering wide-ranging proposals, offered to it by Air China's parent, China National Aviation Holding (CNAHC), until August. The embattled carrier said that under the lock-up clause it is barred from considering the offer until August 9.
Minority shareholders rejected the SIA-Temasek combined bid for a 24 per cent stake in China Eastern. In turn, Air China's parent, China National Aviation Holding said it would bid for a stake of up to 30 per cent in its Shanghai-based rival.
In terms of monetary value, CNAHC said it would pay at least $0.641 a share for a stake in China Eastern, which represents a premium of 32 per cent compared to the price of $0.487 a share the Singapore companies had tabled.
The offer from CNAHC has received stiff resistance from China Eastern, which has rejected outright all moves to form an alliance with its mainland rival.
Meanwhile, Singapore Airlines has also confirmed that such a limiting clause was in place, with spokesman Stephen Forshaw saying the lock-up measure hadn't required shareholder approval.
A CNAHC official responded by saying that his company didn't have any concerns about the lock-up. The CNAHC official also said the state-owned company would make its proposal soon.
The CNAHC proposal will include the three principles outlined in a statement it issued in late December, said a second CNAHC official, who declined to be named. The three principles include Air China and China Eastern establishing a cross-shareholding structure, integration of their cargo operations into a single joint venture, and joint operation of international air routes.