Hong Kong carrier Cathay Pacific will launch a four-billion-dollar attempt to block Singapore Airlines' bid to gain a foothold in the booming Chinese aviation market, reports said Saturday. Citing unnamed sources, Hong Kong's South China Morning Post said Cathay Pacific would seek to buy a significant stake in China Eastern Airlines.
That stake would be worth four billion dollars, Britain's Daily Telegraph said. The shareholding would then be used to try and scupper the Singaporean carrier's own plan to acquire a key stake in China Eastern, the Post said.
Cathay would use it alliance with Air China, China's largest airline which holds 11 percent of China Eastern, to block Singapore Airlines' plan at a December shareholder meeting.
Singapore Airlines and the city-state's Temasek Holdings said earlier this month that they planned to buy a combined 24 percent stake in struggling China Eastern for 923 million US dollars. Analysts have said the deal would offer Singapore Airlines, among the world's most profitable carriers, a foothold in the Chinese aviation market.
The deal requires the support of two-thirds of minority shareholders, the Post said. China Eastern was based in Shanghai, which could have a growing role as an international aviation hub, and flew between Hong Kong and Shanghai, it added.
Cathay's proposal was still be worked on, the Daily Telegraph said citing unnamed sources. "There are still a lot of moving parts," one person close to the situation was quoted as saying.
Cathay Pacific is expected to make a statement as early as Monday to the Hong Kong stock exchange after its shares were suspended Friday pending a price-sensitive proposed transaction. The airline's stock hit an all-time high of 23.05 Hong Kong dollars (3.0 US dollars) on Friday. China Eastern's shares closed up 12.4 percent.
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