China Eastern Airlines Corp., China's state-owned carrier, is on its toes to acquire its smaller rival named Shanghai Airlines Co. in a transaction worth 8.9 billion yuan.

It was informed that Shanghai-based China Eastern will barter 1.3 of its Shanghai-listed A shares for one share of Shanghai Airlines.

China Eastern also informed that it would lift approximately 7 billion yuan under a plan of selling Hong Kong-listed H shares and new yuan-denominated A shares.

As per Shanghai Stock Exchange filing the China Eastern has been mulling over plans to sell its 490 million H shares to a linked company in Hong Kong A-shares worth
1.35 billion yuan will also be sold to ten preferred institutions by the China Eastern.

Those China Eastern shareholders who do not wish to enter the share exchange can opt for a cash alternative, which would fetch them 5.25 yuan for every A share and HK$1.56 for every H share.

On the other hand, Shanghai Airline shareholders will get 5.5 yuan in cash for every share they possess if they too don't wish to enter share exchange.

Both carriers' shares were put under suspension from trading in Shanghai amid price-sensitive reports and will recommence trading in Shanghai on Monday.

The merger is seen as a part of efforts to overhaul China's beleaguered aviation industry.