China Eastern Airlines will buy Shanghai Airlines Co. with 9 billion yuan($1.3 billion).The carrier offered 1.3 new Shanghai-listed shares for each share of the smaller airline, it said in a Hong Kong stock exchange statement today. That’s a 17 percent premium based on the two state-controlled carriers’ last traded prices.
Buying Shanghai Air will boost China Eastern’s market share in its home city to more than 50 percent, giving it the opportunity to raise fares and curb losses. The combined group, with a fleet of about 306 planes, will also surpass Air China Ltd. as the nation’s second-biggest carrier.
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