a bit big article but read it dragon air sold to CX its like another 9W buying Air Sahara

HONG KONG (Reuters) - Hong Kong's Cathay Pacific Airways Ltd. said on Friday it would pay HK$8.22 billion ($1.05 billion) in cash and shares to take over rival Dragonair in a long-expected deal that expands its access to the fast-growing mainland Chinese market.

Cathay, the world's seventh most valuable airline, has been frustrated by its limited position in mainland China, where its only passenger routes are to Beijing and Xiamen.

Dragonair, which flies to 23 mainland cities including the lucrative Shanghai market, has in turn relied on Cathay to feed it international traffic bound for China.

"It is positive for all parties involved," said Peter Drolet, senior analyst at UOB Kay Hian.

"Gaining China access will give unlimited possibilities to Cathay Pacific, and I believe CX (Cathay) will have the ability to turn around any unprofitable routes that Dragonair currently has, and reduce its costs significantly."

As part of the deal, Cathay and mainland carrier Air China Ltd. will step up their cooperation, with Cathay paying HK$4.07 billion to double its stake in Beijing-run Air China to 20 percent. In turn, Air China will pay HK$5.39 billion for 10 percent of Cathay.

Cathay Pacific and Air China said they planned to set up a jointly owned cargo airline based in Shanghai, to be held 51 percent by Air China and 49 percent by Cathay. The companies also said Hong Kong Dragon Airlines Ltd., better known as Dragonair, would keep its current branding for six years.

The deal results in Air China offering to privatise China National Aviation Co. Ltd. (CNAC), which is the largest shareholder in unlisted Dragonair, for at least HK$2.80 a share, a premium of 42 percent over its last closing price, which sent CNAC shares up by 32 percent.

Terms of Cathay's acquisition, which received wide media coverage all week, were roughly in line with expectations. Cathay shares, suspended since Monday morning along with those of the others in the deal, rose by 5.4 percent on Friday.

The deal values Dragonair at roughly three times its book value, a sharp premium to other regional carriers, although analysts have said the attractiveness of Dragonair is the growth that can be achieved by merging into Cathay.

The tie-up creates a formidable rival for mainland carriers China Southern Airlines Co. Ltd. and China Eastern Airlines Corp. Ltd., and forms a powerhouse in the lucrative market between Taiwan and mainland China through Hong Kong, as there are no direct air links between China and Taiwan.