Air China to buy 12.5 per cent Cathay stake for $820 million
18 August 2009
Air China, the second-largest Chinese airline and the national flag carrier, entered into an agreement yesterday with CITIC Pacific, a large diversified business conglomerate, to purchase 12.5 per cent stake it owns in Hong Kong's carrier Cathay Pacific, at a total cost of approximately $820 million (HK$6,335 million).
The deal represents transfer of about 491.9 million shares at a price of HK$12.88 per Cathay Pacific share, a joint statement issued to the Hong Kong Stock Exchange yesterday said.
Simultaneously, CITIC Pacific has agreed to sell a 2-per cent stake in Cathay Pacific to Swire Pacific Ltd, who is the largest share holder of Cathay Pacific and part of the London-based transnational corporation Swire Group, around 78.7 million shares at the same unit price amounting to $131 million (HK$1,013 million).
On completion of the transaction, Air China's stake in Cathay Pacific will increase from the present 17.5 per cent to approximately 30 per cent, and Swire Pacific's holding will rise from 40 per cent to about 42 per cent.
Hong Kong-based CITIC Pacific's holding in the carrier will get reduced from around 17.5 per cent to just below 3 per cent of the issued share capital.
Trading in the shares of Air China, Cathay Pacific and CITIC Pacific were suspended yesterday morning on Hong Kong Stock Exchange, following requests from the respective companies pending the announcement of price sensitive information.