SHENZHEN: Two little-known private companies beat the country's largest carrier to win a controlling 65 per cent stake in
Shenzhen Airlines yesterday afternoon.
Shenzhen-based Huirun Investment Co and Beijing-based Bright Oceans Corporation, outbid nearest rival Air China to take control of the South China based airline.
Bidding for the stake started at 1.8 billion yuan (US$217.4 million), higher than a previous forecast of 1.6 billion yuan (US$193.2 million) and within minutes had reached 2.7 billion (US$326.1 million). The hammer finally coming down at 2.72 billion yuan (US$328.5 million), finalizing one of the country's largest stake transactions in aviation industry.
A lawyer, surnamed Xu, carried out the bidding on behalf of Huirun and Bright Oceans.
"I was authorized to bid and even the final price fell within the authorized price range," he said.
Air China, already the second largest share-holder in
Shenzhen Airlines and pre-auction favourite to take the 65 per cent stake, dropped out of the contest reckoning the price to have climbed too high.
According to the
Shenzhen Enterprise Ownership Exchange Centre, which conducted the auction, value of the State-owned assets of
Shenzhen Airlines increased by about 2.26 billion yuan (US$273.0 million) and net assets surged 487.5 per cent through the sell off.
Neither Huirun or Bright Oceans could be reached for comment yesterday.
According to Bright Oceans' website, it is a high-tech group engaged in telecommunications, transportation, energy and investment, which was developed from a private research institute in
Harbin in Northeast China's Heilongjiang Province. Its high-tech arm BOCO Inter-telecom went public on the
Shanghai Stock Exchange in 2000.
The auction of the stake in
Shenzhen Airlines had triggered great interest both at home and abroad since it was announced on April 20.
Guangdong Guangkong Group, which put the stake on the market, said the sale was the result of restructuring in its parent company, Guangdong Development Bank, which, according to banking law, is not allowed to run any non-banking investment businesses.
Although bidders were required to have at least 1.5 billion yuan (US$181.2 million) in net assets and no less than 3 billion yuan (US$362.3 million) in total assets, some 21 companies applied to participate in the auction, including seven overseas consortiums and airline companies.
