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Air New Zealand sells Virgin Australia stake to Chinese conglomerate Nanshan

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by June 10, 2016 General

Air New Zealand has sold a 19.98 percent stake in Virgin Australia to Nanshan Group. The sale, worth $232.6 million, would make the Chinese company a major shareholder of the second largest airline in Australia but would still keep its share below 20 percent.

New Zealand’s national carrier will sell the stake at $0.33 per share, which is above Virgin’s last trading price of $0.28 and a premium to the $0.30 share price paid by another Chinese firm, HNA Aviation, last month. The purchase is subject to regulatory approval from Chinese authorities.

“We believe Nanshan Group will be a very strong, ositive and complimentary shareholder for Virgin Australia,” Air New Zealand chairman Tony Carter said. “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.”

“We look forward to meeting with Nanshan Group over the coming weeks to discuss the proposed acquisition,” Virgin said. The company is controlled by investors Etihad, Singapore Airlines and Sir Richard Branson’s Virgin Group.

The Kiwi carrier put up its 25.9 percent stake in Virgin for sale in March following a fallout with Virgin Australia boss John Borghetti. Air NZ chief executive Christopher Luxon stepped down from the Virgin board after he was unsuccessful in convincing other members in ousting Borghetti.

Virgin’s share price dropped after Credit Suisse indicated the company would require $1 billion equity raising to reduce debt to reasonable levels. In May, Borghetti struck a deal with HNA, which now owns 13 percent stake in the Australian carrier.

Air NZ said it is considering what to do with its remaining 6 percent stake in Virgin Australia.

Nanshan Group owns the emerging airline, Qingdao Airlines, which launched in 2014.

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