The SIA-CEA deal -- it is a matter of price

There has been much uncertainties and contradictory news around the China Eastern Airline (SIA-CEA) deal, including an attempt by CA/CX for a competitive bidding.

IMO the CA/CX deal is impossible. It is just something CNAC/CA tried to force SIA to raise the price (CX, being CA's partner and very interested in the China market, can only oblige to join the show). Merging CA with CEA will be an anti-trust issue and I am sure the PRC government does not have appetite to deal with such complication at this particular moment.

What CNAC really wanted is for SIA to raise the price. This is natural and reasonable from a shareholder's perspective, when the current market price is more than double the proposed deal price (HK$3.8) for SIA.


Anonymous said...

da u think it's possible?
SIA can choose to leave now, and have CEA plunge over 50% from current price. Of course this means 2 years of negotiation wasted, but if they knew CA is not going to get CEA, why not?

Anonymous said...

Thinking further, China can afford playing rogue. Why not? There isn't too many high growth markets left to be developed, afterall.

This reminds me of the Wahaha case

Sun Bin said...

i think SIA will raise price, to somewhere around 4.5. because that is what the market price is (remember the market index has risen much more, not just CEA). temasek is known to be aggressive in bidding for overseas assets.

if you watch the news of the past 2 month, you will notice chinese government has made it very clear that they do not want to interfere and they want to let the market decide