All-stock deal seen for merger of airlines
By Jui Chakravorty |
April 12, 2010, Monday
|
Print Edition
Print Edition
THE merger talks between United Airlines and US Airways revolve around doing an all-stock deal, with United paying US Airways shareholders a premium similar to that of the Delta-Northwest merger, people familiar with the matter said.
Delta, which bought Northwest in 2008, paid Northwest shareholders a 17 percent premium to the closing price on the day before the announcement.
The two sides have been negotiating break-up fees and reverse break-up fees in the 2 to 6 percent range, to be implemented if either side walks away from the deal, the sources said last Friday.
The companies see more than US$1 billion in synergies from a potential deal, the sources said. Issues such as management will be discussed in the coming days, but United Airlines would be the continuing brand, the sources said.
A deal could be sealed in a few weeks, the sources said. But they also cautioned that talks could still fall through or that other airlines could approach either United or US Airways.
Both airlines declined to comment.
United Airlines is in merger talks with US Airways for a deal that could create the second-largest carrier in the United States, sources told Reuters earlier last week.
The discussions, aimed at cutting costs and competing with a combined Delta-Northwest, have been going on for months, the sources said.
The global airline industry has lost US$50 billion in the past 10 years according to the International Air Transport Association.
Delta, which bought Northwest in 2008, paid Northwest shareholders a 17 percent premium to the closing price on the day before the announcement.
The two sides have been negotiating break-up fees and reverse break-up fees in the 2 to 6 percent range, to be implemented if either side walks away from the deal, the sources said last Friday.
The companies see more than US$1 billion in synergies from a potential deal, the sources said. Issues such as management will be discussed in the coming days, but United Airlines would be the continuing brand, the sources said.
A deal could be sealed in a few weeks, the sources said. But they also cautioned that talks could still fall through or that other airlines could approach either United or US Airways.
Both airlines declined to comment.
United Airlines is in merger talks with US Airways for a deal that could create the second-largest carrier in the United States, sources told Reuters earlier last week.
The discussions, aimed at cutting costs and competing with a combined Delta-Northwest, have been going on for months, the sources said.
The global airline industry has lost US$50 billion in the past 10 years according to the International Air Transport Association.
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