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Cathay joins fight for China Eastern

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SIA deal vulnerable as HK carrier's plan to team up with CNAC may spark bidding war

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Cathay Pacific Airways rejoined the dogfight over the proposed sale of a strategic stake in China Eastern Airlines Corp by announcing yesterday that it would consider teaming up with Air China or its parent company to make a counter-offer.

The move will tip the scale more in favour of market talk that shareholders will reject the HK$7.2 billion offer by Singapore Airlines and Temasek Holdings.

In a statement filed with the Hong Kong exchange yesterday, the Hong Kong flag carrier said it would 'seriously consider any proposal that Air China [or its parent CNAC] may make ... to participate in a strategic partnership with China Eastern Airlines'.

Along with China National Aviation Corp (Group), it aborted in September last year a bid to take a stake in the Shanghai-based carrier supposedly on central government opposition.

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Cathay's move would potentially trigger a bidding war and make it increasingly likely for China Eastern shareholders to reject the HK$3.80 per share Singapore offer for a 24 per cent stake at the extraordinary general meeting in Shanghai this afternoon, analysts said.

CNAC said on Sunday that it would offer at least HK$5 per share, or a 31.58 per cent premium over the Singapore deal, should China Eastern's minority shareholders vote against the deal.

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