STATE-owned Qatar Airways has decided to sell its entire stake in Cathay Pacific Airways for about $897 million (HK$6.97 billion), marking its complete exit from Hong Kong's flagship airline after eight years.
Cathay said late on Wednesday that the Doha-based carrier had approached it about selling its entire 9.7% stake, and it would repurchase the shareholding through a buyback at HK$10.8374 per share, roughly a 4% discount to its last closing share price.
The Gulf carrier had bought the stake in November 2017 from Hong Kong's Kingboard Chemical Holdings, making it the third-largest shareholder in Cathay after Swire Pacific and Air China.
It was Qatar Airways' first major investment in an Asian airline and was aimed at boosting its global influence and increasing traffic through its Doha hub.
Qatar Airways CEO Badr Mohammed Al-Meer said the exit reflected the company's disciplined portfolio strategy and followed a period of strong results, allowing the company to optimise investments and position itself for long-term growth.
The Middle Eastern airline has pursued a strategy of investing in airlines worldwide to strengthen its competitive position, including in British Airways parent IAG, South American carrier LATAM and Virgin Australia .
Cathay is paying roughly a 35% premium over the price Qatar Airways originally paid for the stake to buy it back. The Hong Kong carrier it would fund the deal through internal resources and existing credit lines.
Cathay Chairman Patrick Healy said the stake buyback reflected "strong" confidence in the company's future. The airline has laid out an investment plan of HK$100 billion over seven years that includes fleet renewal, cabin products and lounges.
If the deal is approved, controlling shareholder Swire Pacific's stake in Cathay will rise to 47.69% from 43.12%, while Air China's shareholding will increase to 31.78% from 28.74%.
Cathay and Qatar Airways said they would continue their partnership through the oneworld Alliance.
($1 = 7.7675 Hong Kong dollars) - Reuters
