Turmoil continues for China Eastern deal

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HONG KONG, Jan 2 (AP): The Singapore Airlines bid to buy a 24 per cent stake in China Eastern Airlines appeared in trouble Wednesday after a major shareholder criticised the deal as unfair.
China National Aviation Holding, the parent company of flag carrier Air China, said in a statement Tuesday that the 7.2 billion Hong Kong dollar, or $923.8 million, offer by Singapore Airlines and its parent, the government investment arm Temasek Holdings, did not "reflect the fair value of China Eastern." The offer equals 3.80 dollars per share.
Hong Kong-listed China Eastern, China's third-biggest carrier, traded at 7.95 dollars a share in Hong Kong Wednesday, an increase of 3 per cent Monday's close and more than double the Singapore bid.
Singapore Airlines, however, said the offer was "fair and mutually agreed by all parties."
"It is the maximum justified on the business fundamentals," a spokesman, Stephen Forshaw, said.
The statement by China National Aviation Holding, which holds a 12.07 per cent stake in China Eastern, was the strongest indication yet that it would vote against the deal at a shareholders' meeting January 8.
Analysts have speculated that China National Aviation may not support the tie-up because it could pose a major competitive threat to Air China's business.
They have said that Air China, together with Cathay Pacific Airways, could make a higher bid for the stake. Cathay and Air China had teamed up in September last year to bid for the stake in China Eastern, but then pulled out.