CHINESE conglomerate HNA Group Co. has agreed to buy Swiss airline catering firm Gategroup Holdings for 1.4 billion francs (US$1.5 billion) in cash as the aviation-shipping conglomerate steps up its global expansion.

    The deal adds to a string of overseas acquisitions for privately owned HNA, which include plans announced in February to buy U.S.-listed electronics distributor Ingram Micro for US$6 billion and the US$2.5 billion purchase of Irish aircraft lessor Avolon Holdings Ltd. last year.

    HNA, which operates more than a dozen airlines including Shanghai-listed Hainan Airlines Co., is offering 1.4 billion Swiss francs, or 53 Swiss francs per share, for all of Gategroup’s outstanding shares, about 20 percent more than the closing price Friday.

    Gategroup’s board has recommended the offer, the companies said in a joint statement.

    HNA plans to delist Gategroup from the Swiss stock exchange. Gategroup will remain headquartered in Switzerland under the leadership of the current management team.

    Spurred on by slowing economic growth at home, Chinese companies have been highly acquisitive this year, with announced deal values topping US$87.5 billion so far, compared with a record US$103 billion launched last year.

    This year, nearly half of all China outbound acquisitions in value terms has gone into Switzerland, thanks to China National Chemical Corp.’s record US$43 billion bid for seeds and pesticides maker Syngenta AG.

    Private companies in China are starting to rival State-owned enterprises in heeding the government’s call to go global.

    Purchasing an established airline catering network may add to a group’s profits as the returns on the business can be good, said Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul.

    “Catering business can be very good if you have the volume,” Um said. “The acquisition will help address the growing need for catering as more and more people travel by air. In the long run, HNA can bring in some of the know-how into China and help improve the service quality of its airlines.”

    Gategroup had a loss of 63.4 million francs in the year ended December, giving the company a 24.5 percent negative return on equity. Hainan Airlines had a 10.1 percent return on common equity. (SD-Agencies)