Air China will take control of troubled Shandong Airlines, which will result in Shandong being delisted from the Shenzhen Stock Exchange. Shandong Airlines, which has been listed for nearly 22 years, has received the flag carrier’s tender offer and will withdraw from Shenzhen’s B-share market, referring to the bourse’s equities traded in Hong Kong dollars, according to a statement from Shandong, which is based in Jinan.
The offer price is HKD2.62 (33 US cents) per share, resulting in a maximum of HKD367 million (USD46.8 million), according to the offer report. Shandong Airlines and its parent Shandong Airlines Group have become insolvent amid the continuous impact of COVID-19 outbreaks, said the eastern Chinese flight operator. The transaction should provide funds for them to solve their problems, it added. After the acquisition, Air China will inject more funds into Shandong Airlines Group.
“Air China, Shandong Aviation Group and Shansteel Financial Holdings Asset Management (Shenzhen) Company entered (14-Jun-2022) a framework agreement, under which Air China will acquire the 1.41 percent equity interest of Shandong Aviation Group held by Shansteel Financial Holdings. Following the equity acquisition, Air China will hold no less than 66 percent of equity interest in Shandong Aviation Group and obtain control of the company. The proposed transaction will also result in Air China’s direct and indirect aggregate equity interest in Shandong Airlines exceeding 30 percent. The framework agreement is an intent and Air China has not completed due diligence, audit and valuation of Shandong Aviation Group,” Air China said in its stock market announcement.