Cathay in takeover talks with Dragonair?

Gavin Lipsith

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Trading in five related companies' shares have been suspended as the Hong Kong flag carrier prepares to make a statement in which it is expected to announce the takeover of Dragonair

Cathay, which already holds a 17.79% stake in Dragonair, is reported to have been in negotiations with CNAC over purchasing its holding in the carrier, at a cost of more than HK$10bn ($1.28bn). Shares in Dragonair's other major shareholders – Air China, Swire Pacific and CITIC Pacific – have also been suspended and an announcement is expected this week.

According to local media, the move would offer Cathay an extended presence in mainland China, where Dragonair holds many popular routes including the busy Hong Kong to Shanghai route. Dragonair also flies to Bangkok, Taipei and Tokyo.

Keep an eye on RavenFox.com for developments.