Air China Set To Buy HK Cathay Pacific Airlines

[TheDonger]

Any Cathay guys have thoughts on this?

[font=verdana, arial, helvetica]Air China Set To Buy HK Cathay Pacific Airlines - Report


DOW JONES NEWSWIRES
March 15, 2005 6:49 p.m.

HONG KONG -- Air China Ltd. (0753.HK) is in talks with conglomerate Swire Pacific Ltd. (0019.HK) that could see the Chinese carrier take over Swire's 45% owned Cathay Pacific Airways Ltd. (0293.HK), the South China Morning Post reports.

Citing a senior Swire executive, the newspaper said Swire is in advanced negotiations that would see Cathay take over its rival Dragonair before being itself subsumed into the Air China Group.

Cathay is Hong Kong's de facto flag carrier, while Dragonair is a Hong Kong-based regional airline that's partly owned by Cathay and Swire.

The newspaper said if Hong Kong-listed Swire accepts Air China shares in return for its stake in Cathay , it would be the single largest shareholder in the mainland carrier and place its mainly British executives at the core of the Chinese airline's operations

The paper also citing "informed sources in the affected companies" said a deal would likely be announced in two weeks.

The newspaper said that talks over a crossholding structure between Air China and Cathay began in the middle of last year, when the mainland carrier first set a date to list in Hong Kong.

In November, Cathay paid about HK$2.91 billion for 10% in Air China, which listed in Hong Kong on Dec. 15.

Carolyn Leung, a Cathay Pacific spokeswoman, declined to comment. "We don't comment on market rumors," she said.

Any deal will require consent from multiple shareholders at the listed firms that potentially have divergent interests. Dragonair is controlled by China National Aviation Co. (1110.HK), while Chinese conglomerate CITIC Pacific Ltd. (0267.HK) has stakes in both airlines.

But a deal would be a boon for Cathay , which only won the right to fly to China a couple years ago after an absence of more than 10 years. Cathay resumed passenger services to Beijing in December 2003 after a 13-year hiatus in the mainland, and it now operates daily services to the capital. The airline early this year launched passenger services to Xiamen and a freighter service to Shanghai.

-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343; [email protected]
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[Cpt. Underpants]

Message to staff from the Chairman

Dear all,

We have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair. We would like to reiterate that Swire Pacific remains committed to being the principal shareholder in Cathay Pacific for the long term.

For more information, please refer to the company's statement to the Stock Exchange of Hong Kong.

David Turnbull
Chairman


Joint clarificatory announcement to the Hong Kong Stock Exchange

This clarificatory announcement is made at the request of the Hong Kong Stock Exchange. Swire Pacific and Cathay Pacific have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair. Cathay Pacific and Air China have made progress in exploring opportunities for further cooperation, including in relation to the Hong Kong-China aviation market, under the terms of the MOU dated 20 October, 2004. Such cooperation discussions necessarily involve Dragonair. However, there are currently no agreements between Air China and Cathay Pacific in relation to Dragonair. Swire Pacific remains committed to being the principal shareholder in Cathay Pacific for the long term and does not intend to do anything which would require a general offer to be made for the shares of Cathay Pacific under the Hong Kong Code on Takeovers and Mergers. In addition, Swire Pacific does not intend to become the principal shareholder of Air China. The board of Cathay Pacific has not received an approach from any person which might lead to a general offer being made for its shares.


This clarificatory announcement is made at the request of the Hong Kong Stock Exchange.

Swire Pacific and Cathay Pacific have noted press and other reports about possible changes in the ownership of Cathay Pacific, Air China and Dragonair.

On 20 October, 2004, Cathay Pacific and Air China announced that they had entered into the MOU, which envisaged a strategic investment by Cathay Pacific in Air China and future cooperation between them. In December, 2004, Cathay Pacific acquired a 10% interest in the share capital of Air China when Air China’s shares were listed on the Hong Kong Stock Exchange. This acquisition was the subject of announcements by Cathay Pacific dated 21 November, 2004 and 15 December, 2004 and a circular to its shareholders dated 30 December, 2004.

The MOU set out the framework for discussing, among other things, the objective of exploring the opportunities for developing a close partnership and cooperation between the aviation and related businesses of Cathay Pacific and Air China in Hong Kong and Mainland China. Cathay Pacific and Air China have made progress in exploring opportunities for further cooperation, including in relation to the Hong Kong-China aviation market, under the terms of the MOU. Such cooperation discussions necessarily involve Dragonair. However, there are currently no agreements between Air China and Cathay Pacific in relation to Dragonair.

Swire Pacific, which holds 46.5% of the shares in Cathay Pacific, is committed to being the principal shareholder of Cathay Pacific for the long term and does not intend to do anything which would require a general offer to be made for the shares of Cathay Pacific under the Hong Kong Code on Takeovers and Mergers. In addition, Swire Pacific does not intend to become the principal shareholder of Air China. The board of Cathay Pacific has not received an approach from any person which might lead to a general offer being made for its shares.

By order of the Boards of Swire Pacific and Cathay Pacific

 

[stwjet]

Captain,

Any other word on this topic as of late?

Thanks Scott

 

[Cpt. Underpants]

Nada. It would appear that CX is about to buy Dragonair (KA) outright and use KA as our answer to low-cost Asian carriers and China routes. More news soon, apparently.

 

[House_X]

Last I heard from MSNBC Hong Kong and the Asian Wall Street Journal, the Air China merger deal is off. Also, I checked pprune and they were confirming this rumor.

If Air China/CX/KA merged it would be the worlds largest airline...according "the journal"...