Business Activities News
- Temasek may join bid for China Eastern
Date: 25-May-2007 Sources: (Shenzhen Daily)
TEMASEK Holdings Pte., a Singapore state-owned investment company with US$85 billion in assets, may join its unit Singapore Airlines Ltd. to bid for a stake in China Eastern Airlines Corp., Morgan Stanley said.
A joint investment with Temasek means the carrier could gain 'strategic'' control of China Eastern without paying for the stake on its own, analysts Chin Lim, Sophie Loh and Edward Xu wrote in a report. Temasek owns 56 percent of Singapore Airlines, Asia's most profitable carrier.
'With a co-investor whose interest is aligned solely with Singapore Airlines, the carrier would be in the sweet position of having effective strategic control without paying significant upfront capital and assuming initial associate losses,'' the analysts said in the report, released late Wednesday.
Singapore Airlines may be close to announcing plans to buy China Eastern, the country's only publicly traded airline to post a loss last year. Singapore Airlines said it's in advanced talks for a potential investment, without elaborating.
'I cannot speak for China Eastern Airlines as to who else they may have, or be, talking to,'' Stephen Forshaw, spokesman at Singapore Airlines, said. Temasek won't comment on market speculation, the company said in a statement.
Temasek has teamed up with Singapore Airlines before. The two jointly invested in Singapore-based budget airline Tiger Airways Pte. Singapore Airlines' cargo unit and Temasek also started a joint venture cargo carrier with China Great Wall Industry Corp.
Temasek, set up three decades ago to nurture Singapore industries, is owned by Singapore's finance ministry. Profit for the year ended March 2006 jumped 71 percent to a record S$12.8 billion (US$8.4 billion), Temasek said in September. Its investments in China include stakes in China COSCO Holdings Ltd. and Air China Ltd.
Chinese airlines have to remain under domestic majority ownership, according to government regulations. Singapore Airlines can buy a maximum of 25 percent, a stake valued at US$1.2 billion at the current market price.
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