Air China increases shareholding in Cathay Pacific

August 19, 2009

Air China has revealed that it is paying HK$6.3 billion to increase its shareholding in Cathay Pacific Airways, just three years after securing its first stake in the Hong Kong-based carrier.

The transaction was conducted through Citic Pacific, the arm of China’s largest investment group that is based in Hong Kong. It will see Air China’s stake in Cathay Pacific rise from 17.5 per cent to 29.99 per cent, which is just shy of the takeover threshold.

Cathay’s controlling shareholder, Swire Pacific, agreed to pay HK$1 billion to increase its holding by two per cent, giving it a total share in the carrier of 42 per cent.

Swire, which is controlled by the UK firm John Swire & Sons, is an important part of Hong Kong’s colonial past and has been involved in many previous transactions involving Chinese flagships.

In 1987, Citic Pacific made its first investment in Cathay Pacific. In 2006, Swire and Cathay entered into cross-shareholding agreements with Chinese flag carrier Air China.

According to the terms of that agreement, Air China is not allowed to make a takeover bid for Cathay Pacific without the approval of Cathay’s board.

For more information on this article please visit edition.cnn.com.

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Written by Allison Stuart · Filed Under Business, Travel 

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