Singapore state investor Temasek Holdings will join Singapore Airlines to acquire a stake of up to 25% in China Eastern Airlines, Hong Kong's South China Morning Post reported on Friday, citing unnamed people familiar with the deal.
Singapore Airlines, the world's top passenger airline by market value, has set a HK$6 billion (US$766 million) limit on its investment in the deal, which would give it a stake of less than 20%, the report said, citing unnamed sources.
The story comes after a May 23 research report from Morgan Stanley said Temasek was the "most plausible candidate" to step in and join Singapore Airlines in taking a stake in the Chinese airline.
"We note, however, that Temasek has not indicated any such intention at this stage," the Morgan Stanley report said.
The South China Morning Post report, citing a person familiar with the negotiations, said China Eastern chairman Li Fenghua was unlikely to announce an agreement in Hong Kong before next week.
One threshold for the deal is approval from the state-owned Assets Supervision and Administration Commission of the State Council, the newspaper said.
Shares of Singapore Airlines jumped on Wednesday on reports it will buy a US$1 billion stake in loss-making China Eastern.
Industry analysts are positive about a China Eastern tie-up with Singapore Airlines that would give the Chinese carrier access to its partner's extensive global network, and financial backing.
Singapore Airlines first confirmed last July it was in talks with the Shanghai-based airline.