Wednesday, January 30, 2008

China Eastern retries the Singapore Airlines' bid, will they eventually succeed?

China Eastern Airlines said on Jan 28 that the company is striving to hold another shareholder meeting with the purpose of gaining shareholders’ support for the tie-up with Singapore Airlines, according to the company's chairman Li Fenghua.

There is no detailed meeting schedule yet, as it is still in a preliminary stage. Last year, Singapore Airlines and parent Temasek Holdings offered to buy 24% of China Eastern Airlines at a price of HK$3.8 per share, totalling HK$7.16 billion in order to expand their businesses in China's booming aviation market.

However, the bid was rejected earlier by China Eastern's shareholders while China National Aviation Corporation (Group) Limited (CNACG), the parent group of Air China offered to take the bid at a higher price and establish strategic partnership with China Eastern. China Eastern later refused to respond to CNACG's proposal, saying the offering was incomplete, insincere and lacked legal validity.

Singapore Airlines and its parent Temasek Holdings refused to raise the bid as they found "nothing is a must to get".

So what does the future bode for these companies?