SHANGHAI: China Eastern Airlines Corp said yesterday it won't consider a bid from China National Aviation Corp (CNAC) and that it's still looking for investors.
The offer made by CNAC, the parent company of Air China, was "in the absence of sincerity and planning on the part of CNAC and mutual trust between CNAC and the company", and wasn't "legally binding", the company said in a statement to the Hong Kong stock exchange yesterday.
China Eastern's proposal to sell a 24 percent stake to Singapore Airlines and Temasek at HK$3.8 per share was rejected by its shareholders on Jan 8 after CNAC came up with a counteroffer.
CNAC offered no less than HK$5 for 2.985 billion H shares in China Eastern, 30 percent higher than the offer made by Singapore Airlines at HK$3.8 apiece.
"CNAC's offer cannot help the company to gain access to world-class management know-how, to improve its management, operational efficiency and profitability," the statement said.
CNAC's proposal is "unclear" in terms of specifics and the implementing party's identity and "is not legally binding", China Eastern's legal adviser Chen & Co said.
There is "a high level of uncertainty" around the proposal because its implementation could face legal and regulatory obstacles, Chen & Co said. The proposal needs approval from the government and shareholders of both China Eastern and Air China.
China Eastern's financial advisor Shenyin & Wanguo Securities Co Ltd told the company not to accept CNAC's proposal without a solution to the competition problem.
CNAC's proposal will need a long time to implement, making it impossible for China Eastern to meet its imminent development needs, Shenyin & Wanguo said. It has taken China Eastern and Singapore Airlines two years to prepare the cooperation proposal.
Reports last week said Singapore Airlines will not raise its offer for a stake in China Eastern.
Analysts said China Eastern will likely continue talks with Singapore Airlines and carry out a second round of roadshows to convince shareholders.
Shares in Air China jumped 3.34 percent to close at 18.9 yuan and China Eastern rose 2.69 percent to close at 14.89 yuan in Shanghai.
Source:China Daily
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