Cathay Pacific enters low-cost 4.9 billion full-purchase express delivery port market share increased to 53% HNA is the seller guarantor
Cathay Pacific Airways (0293) announced yesterday that it has fully acquired Hong Kong Express, with a price of 4.93 billion yuan, officially entering the low-cost market. The Credit Suisse report estimates that after the acquisition, Cathay Pacific’s market share in Hong Kong increased to approximately 53%, which may create a monopoly. At the same time, the transaction still exists, and the express controlling partner of the Express has sent a letter to Guotai to question the agreement. The parent company of the express carrier HNA Group has been accused of bypassing the sale of the shareholders, so that the transaction can be completed without any variables.
Cathay Pacific’s share price was under pressure yesterday, down 3.3% at the end of the day, closing at 13.34 yuan, down 0.34 yuan or 2.49%. Hong Kong Express lost 141 million yuan last year to a net asset value of 1.119 billion yuan at the end of last year. In other words, Cathay’s purchase price of 4.93 billion yuan is equivalent to a price-to-book ratio (PB) of 4.4 times.
Completion of the transaction at the end of this year According to the announcement, Cathay Pacific has entered into an agreement with the seller’s guarantor to fully acquire 100% of the shares of Hong Kong Express for a price of 4.93 billion yuan. Among them, 2.25 billion yuan was paid in cash and 2.68 billion yuan was paid through issuance and replacement of loan notes. Cathay said that after the acquisition, Express will continue to position low-cost airlines. It is still an independent operating airline. It is believed that Cathay Pacific and Express’s business and models can complement each other to a large extent, and the transaction is expected to have synergistic effects. If the transaction is completed by the end of this year, Express is expected to become a wholly-owned subsidiary of Cathay Pacific.
Zhong Guoyi’s intention to make a key announcement also pointed out that a law firm representing the shareholders of the intermediate holding company of Express Express sent a letter to Cathay Pacific, expressing its intention to argue that the seller entered into an agreement on the transaction. The Share Acquisition Agreement requires a copy of the documents authorizing the Vendor to enter into the Share Purchase Agreement to be delivered to the Company prior to payment of any deposit. In the event of an obstructive transaction, the company has the right to terminate the share purchase agreement under the share purchase agreement.
The Express shareholders also expressed dissatisfaction with the deal. Zhong Guojun, one of the chairman and major shareholder of Express, has repeatedly replied to the media that he has no intention of selling the equity of the express. After the announcement of Cathay Pacific, he also responded to the media that HNA bypassed the direct sale of shareholders and is seeking legal advice.
According to Cathay Pacific’s announcement, the seller of this transaction is Hong Kong Express Holdings, and HNA Group is the seller’s guarantor and does not mention other shareholders.
Last year, the company’s net asset value was 1.1 billion. Hong Kong Express was established in 2004. It was formerly known as “Hong Kong United Airlines". In 2006, HNA was introduced as one of the major shareholders and renamed. By the end of December last year, the profit-to-loss loss was 141 million yuan and the net asset value was 1.119 billion yuan. At present, there are 27 destinations for express shipments, and Japan, South Korea and Thailand account for more than 70%. Earlier, investment bank Macquarie said that flights from Hong Kong to Japan accounted for up to 40% of China’s Thai share, and fast flights accounted for 20%. After the acquisition, Cathay Pacific can occupy half of the country flying to Japan.