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Monday, 7 January 2008

Singapore Airlines stands by offer for China Eastern

Singapore Airlines (SIA) stuck to its position Monday, saying its offer to invest in China Eastern Airlines (CEA) at 3.80 Hong Kong dollars (45 US cents) a share is one that will bring long-term benefits to the Shanghai-based carrier.

SIA's plans to acquire a stake in the struggling Chinese carrier face a potential setback when CEA minority shareholders meet Tuesday to vote on the deal amid growing rumblings the offer price severely undervalues the company.

Air China's parent firm, China National Aviation Corp. (Group) Limited, said Sunday it was ready to pay at least five Hong Kong dollars a share if CEA minority shareholders rejected SIA's offer on Tuesday
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My 2 cents worth:
Sure la the minority shareholders would reject SIA's offer of HK3.80 per share cos after all, China National Aviation Corp. (Group) Limited is offering minimum of HK$5.00 per share.
In my simple and humble opinion, minority shareholders should accept SIA's offer even though it is HK$1.20 lower than CNAC per piece. With SIA's participation in CEA, one would expect it to flourish and prosper. Therefore, it will be a long term investment and my bet is CEA will recover from its present position to be a strong and viable company. With another Chinese company having a big shareholding of CEA,it will be back to square one.
This may not be a good example but it is worthwhile talking about it. Remember the MSA case? Its successors were MAS and SIA. Now MAS is losing money year after year but SIA is making more and more profits every year.

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