QRC3288
Jan 7, 08, 8:57 pm
Many here likely have been following these developments closely alongside the massive article in SCMP this morning, but for those who haven't:
1.) CNAC, Air China's parent who owns a toehold roughly 12% of China Eastern's H-Shares, will definitely vote against the China Eastern-Singapore Airlines deal.
2.) The vote requires 2/3 approval by China Eastern's shareholders, and without their parent voting it seems a real possibility that CNAC can, with a bit of support from institutions, shoot the proposal down.
3.) CNAC has proposed a HKD$5 per share offer for China Eastern, 30% higher than the SQ offer. MU is opposed to the CNAC offer, and SQ says they won't budge higher and get into a bidding war.
4.) CX today issued a statement saying they will seriously reconsider rejoining the bid with CNAC should the MU-SQ deal get shot down by shareholders. Back on the train!
5.) It seems CNAC has won the battle against SASAC (the mainland supervisory agency that oversees all the state-owned enterprises), because just a few months ago SASAC was able to scuttle both CA and CX going for MU. CA's former CEO, promoted from the company to work in the govt, likely had a large role in the reversal.
6.) Mind you, the state council gave this the thumbs up a few months back to MU-SQ, likely the sole reason the CA-CX bid drowned before it even became a bid. Contrary to popular thought, it was actually the state council who originally proposed SQ to take a look at MU, as they were eager to clean up MU and Temasek...aka the Singapore government...was clamoring for more deals in inland China, where some serious IRR can be generated. So it was a little of "I scratch your back...". SQ cleans up MU, gets a move into PVG for a possible second Asian hub but a disaster of an airline in the process, and then Temasek gets boatloads more cash with lucrative deals inside China in exchange for the favor of cleaning up MU.
Regardless, this is huge for a few reasons. 1.) It shows that for all the complaining those who don't live in Asia do about China's SOEs and their lack of competitiveness, this is pretty much a textbook hostile bid. Mind you it takes far more guts to do this when the government is breathing down your neck, and your supervisor...aka the person who decides if you keep your job or not...says you can't do it. It amuses me slightly that CX - run in a relatively free market environment by westerners - completely chickened out in the face of Chinese regulators a few months back, similar to the way sometimes US companies have lack guts in the face of Chinese authorities when it comes to being creative with the mainland's oftentimes arcane and ridiculous (and arbitrarily enforced) rules (see Mattel, Google and Yahoo). It takes CNAC and CA have the cajones to go ahead and give the finger to SASAC and govt authorities, who now...likely to save face...have a "neutral" policy towards the CNAC bid.
2.) If this goes through, I have no idea what it means for CX, CA and MU alliance status. CX and CA have that complex joint-ownership 17.6% share swap thing, yet CA is now a full member of Star Alliance and MU is clearly the candidate for OneWorld. Any thoughts?
1.) CNAC, Air China's parent who owns a toehold roughly 12% of China Eastern's H-Shares, will definitely vote against the China Eastern-Singapore Airlines deal.
2.) The vote requires 2/3 approval by China Eastern's shareholders, and without their parent voting it seems a real possibility that CNAC can, with a bit of support from institutions, shoot the proposal down.
3.) CNAC has proposed a HKD$5 per share offer for China Eastern, 30% higher than the SQ offer. MU is opposed to the CNAC offer, and SQ says they won't budge higher and get into a bidding war.
4.) CX today issued a statement saying they will seriously reconsider rejoining the bid with CNAC should the MU-SQ deal get shot down by shareholders. Back on the train!
5.) It seems CNAC has won the battle against SASAC (the mainland supervisory agency that oversees all the state-owned enterprises), because just a few months ago SASAC was able to scuttle both CA and CX going for MU. CA's former CEO, promoted from the company to work in the govt, likely had a large role in the reversal.
6.) Mind you, the state council gave this the thumbs up a few months back to MU-SQ, likely the sole reason the CA-CX bid drowned before it even became a bid. Contrary to popular thought, it was actually the state council who originally proposed SQ to take a look at MU, as they were eager to clean up MU and Temasek...aka the Singapore government...was clamoring for more deals in inland China, where some serious IRR can be generated. So it was a little of "I scratch your back...". SQ cleans up MU, gets a move into PVG for a possible second Asian hub but a disaster of an airline in the process, and then Temasek gets boatloads more cash with lucrative deals inside China in exchange for the favor of cleaning up MU.
Regardless, this is huge for a few reasons. 1.) It shows that for all the complaining those who don't live in Asia do about China's SOEs and their lack of competitiveness, this is pretty much a textbook hostile bid. Mind you it takes far more guts to do this when the government is breathing down your neck, and your supervisor...aka the person who decides if you keep your job or not...says you can't do it. It amuses me slightly that CX - run in a relatively free market environment by westerners - completely chickened out in the face of Chinese regulators a few months back, similar to the way sometimes US companies have lack guts in the face of Chinese authorities when it comes to being creative with the mainland's oftentimes arcane and ridiculous (and arbitrarily enforced) rules (see Mattel, Google and Yahoo). It takes CNAC and CA have the cajones to go ahead and give the finger to SASAC and govt authorities, who now...likely to save face...have a "neutral" policy towards the CNAC bid.
2.) If this goes through, I have no idea what it means for CX, CA and MU alliance status. CX and CA have that complex joint-ownership 17.6% share swap thing, yet CA is now a full member of Star Alliance and MU is clearly the candidate for OneWorld. Any thoughts?