HONG KONG (XFN-ASIA) – Trading in shares of Cathay Pacific Airways Ltd, Swire Pacific Ltd and CITIC Pacific Ltd has been suspended pending announcements, the stock exchange said.
Air China and China National Aviation Co Ltd (CNAC) have also requested that trading in their shares be suspended pending announcements.
The suspension follows a newspaper report that Cathay Pacific is close to buying out 17.8 pct-owned unit Hong Kong Dragon Airlines Ltd (Dragonair) for at least 10 bln hkd.
The report said Cathay Pacific is expected to buy out the stakes held in Dragonair by Swire Pacific, CITIC Pacific and CNAC with a combination of cash and shares.
CITIC Pacific owns 25.5 pct of Cathay Pacific and 28.5 pct of Dragonair.
Cathay Pacific, 46.3 pct of which is owned by Swire Pacific, holds a 17.8 pct of Dragonair and 10 pct of Air China.
By: rdc1000 - 5th July 2006 at 09:51
The latest on this..
Cathay expects late-August completion of Dragonair takeover
Nicholas Ionides, Singapore (05Jul06, 02:16 GMT, 364 words)Cathay Pacific Airways expects to complete its proposed takeover of fellow Hong Kong-based carrier Dragonair next month following a shareholders’ vote.
The Oneworld alliance carrier announced last month that it had agreed to buy the 82.21% of Dragonair that it does not already own for HK$8.22 billion ($1.1 billion) from Air China-owned China National Aviation (CNAC), CITIC Pacific, Swire Pacific and a handful of minority shareholders.
Air China and CNAC will in turn acquire a combined 17.5% of Cathay from CITIC and Swire for HK$5.4 billion, while Cathay will double its stake in Air China to 20% for HK$4.1 billion.
Cathay says in the latest issue of staff newsletter CX World that it expects the Dragonair takeover to be formally completed “late August after ratification by shareholders”. It adds that a vote in favour must come from minority shareholders as Swire and CITIC, which are the biggest single shareholders in Cathay, will be excluded from voting since they are connected parties.
The takeover of Dragonair will allow Cathay to expand its limited presence in China, which is something it has been trying to do for some time. Dragonair earns most of its revenue from China services and currently serves 23 destinations in the country, while Cathay serves just three: Beijing, Xiamen and Shanghai, the latter only with freighters.
As part of the takeover deal Cathay will retain the Dragonair brand for six years although it will be managed by the larger airline. Cathay chief operating officer Tony Tyler also says Cathay will continue to serve China with its own aircraft, “underlining how both carriers will operate separately to give passengers wider product choice”.
“We are paying a full price for Dragonair, but it is worth it for us,” he says.
“Our combined network will be hugely powerful. With 16 flights a day to Shanghai, eight to Beijing and more than 126 a week to other cities, Dragonair has by far the biggest mainland network outside any mainland carrier.
“For Cathay Pacific to organically grow that network would take forever and we can’t afford to wait that long. Dragonair has very attractive slots at Beijing and Shanghai too. Both those airports are pretty much full.”
Source: Air Transport Intelligence news
By: CWBalmer - 9th June 2006 at 19:49
When I lived in Hong Kong, a mate of mine of mine was an A330 Captain for Dragonair and I always got jump seat rides whenever I flew up to Beijing for work – they are a great airline (even in with the other pax!)….I hope they don’t change too much, although CX are pretty cool if you ask me – I have flown more with them than with with any other airline…
By: bmi-star - 9th June 2006 at 10:46
Would make sense. Dragonair fly to a numbr of Chinese cities that CX don’t, so it would open up a new market for them
By: wozza - 9th June 2006 at 07:20
Referencing wikipedia an announcement has been made today that Cathay Pacific now wholly owns dragonair:
“On 9th June 2006, Cathay Pacific announced to buy out Dragonair in a deal worth HK$8.22 billion in cash and stock. Dragonair will keep its separate brand name for at least 6 years.”
Wozza
EDIT
Found this on the BBC website with further news on Air China as well, seems Cathay has gone on an offensive of the chinese market: http://news.bbc.co.uk/1/hi/business/5062646.stm
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June 9, 2006 at 12:32 am