China’s HNA Group To Acquire Swiss Airline Caterer Gategroup (GATE) For $1.5B

Chinese conglomerate HNA will buy the Swiss airline catering and logistics services company Gategroup for 1.4 billion Swiss francs ($1.5 billion). Under the terms of the deal, HNA would pay 53 francs for each share of Gategroup — a 20.7 percent premium over the Zurich company’s closing price Friday.

Additionally, Gategroup shareholders would also receive a previously proposed dividend of 0.30 francs per share for the financial year ending Dec. 31, 2015.

“Beyond our shareholders, this transaction is a great next step for all Gategroup employees,” Gategroup CEO Xavier Rossinyol said in a statement released Monday. “Also for our customers, partners and suppliers, the strength of HNA in the key areas of the industry and especially in Asia will help Gategroup to further strengthen our global network, while keeping the highest industry standards.”

Gategroup would retain its Zurich headquarters, the company said.

The deal still requires regulatory approval and a nod from 67 percent of Gategroup’s shareholders. Gategroup’s board of directors has unanimously recommended that shareholders accept the offer.

The airline caterer has been struggling to make profits in recent years as passengers increasingly switch to low-cost flights. For the financial year ending Dec. 31, the company reported a loss of 63.4 million francs on revenue of 3 billion francs.

The privately held HNA Group, meanwhile, has been aggressively diversifying its portfolio in recent months under the leadership of Chinese billionaire Chen Feng. The company, which also owns China’s fourth-largest airline Hainan Airlines, was founded in 2000 as a marine shipping company, but has since diversified its operations to include transportation, logistics, tourism, banking and insurance.

Following the announcement of the deal, Gategroup's shares surged 16 percent in early trade, outperforming the broader market index.

The HNA-Gategroup deal is the latest in a series of overseas acquisitions that Chinese companies have undertaken over the past year, as weakening domestic growth threatens to impact profits. In 2015, Chinese firms finalized overseas deals worth $61 billion — up 16 percent from 2014.

Earlier this year, the Tianjin Tianhai Investment Company — a unit of the HNA Group — agreed to acquire the American electronics distributor Ingram Micro for $6 billion. Prior to that, China’s state-owned ChemChina announced the purchase of Swiss agricultural giant Syngenta for almost $44 billion.