Cathay Pacific has entered into a Share Purchase Agreement for the acquisition of 100% of the low-fare airline Hong Kong Express Airways.
The transaction is expected to be complete on or before 31 December 2019 for a total of HK$4.93 billion. On completion of the transaction, HK Express will become a wholly-owned subsidiary of Cathay Pacific. The group confirmed it plans to continue operating HK Express (HKE) as a stand-alone low-cost carrier.
Cathay Pacific said the transaction is expected to be “good for the travelling public, good for the Hong Kong hub and good for the Cathay Group” and said it is: “expected to generate synergies as the businesses and business models of Cathay Pacific and HKE are largely complementary.”
The company suggests that HK Express’ unique market segment along with the network of the Cathay Group could boost connection opportunities through Hong Kong. “The Transaction represents an attractive and practical way for the Cathay Pacific Group to support the long-term development and growth of its aviation business and to enhance its competitiveness.
“It is intended to continue to operate HKE as a standalone airline using the low-cost carrier business model.”
Completion is dependent on certain conditions being fulfilled, including clearances required from relevant competition authorities, consents under relevant contracts of HKE and the termination or variation of certain arrangements between HKE and its related parties.
According to the stock filing, the HK$4.93 billion deal is comprised of HK$2.25 billion cash and a non-cash component of HK$2.68 billion, subject to completion adjustments.