Almost one-third of Virgin Australia will soon be owned by interests from China.
Nanshan Group, a privately owned Chinese conglomerate, is becoming a major player in Australia’s domestic airline industry with a $232 million purchase of part of Air New Zealand’s stake in Virgin.
Air New Zealand says it has a deal with Nanshan for the sale at $AU0.33 a share. Nanshan will end up with 19.98% in Virgin.
Nanshan’s aviation interests include its own emerging airline, Qingdao Airlines, launched in April 2014.
The sale is subject to Nanshan getting regulatory approvals from Chinese authorities.
The deal follows last month’s announcement that HNA Aviation Group, China’s largest private airline operator, is buying a 13% stake in Virgin for $159 million.
The latest deal at 33 cents a share is a premium to the 30 cents paid by HNA. Virgin shares last traded at $0.28.
The other substantial shareholders in Virgin Australia are Singapore Airlines, Etihad Airways and Virgin Group in the UK.
Air New Zealand in March announced it was exploring options for its slice of Virgin Australia, including a possible sale.
This latest deal still leaves Air New Zealand with about 6% of Virgin. The airline says it is looking at its options regarding the remaining shareholding.
Today the chairman, Tony Carter, says Nanshan will be a very strong and complimentary shareholder for Virgin Australia.
“The sale will allow Air New Zealand to focus on its own growth opportunities, while still continuing its long-standing alliance with Virgin Australia on the trans-Tasman network,” he says.
Air New Zealand has been advised by First NZ Capital and Credit Suisse.
Virgin Australia says it understands that Nanshan Group will put forward a nomination for a representative on the board.
“We look forward to meeting with Nanshan Group over the coming weeks to discuss the proposed acquisition,” Virgin says.
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