Southwest (LUV) to Buy AirTran (AAI) for $1.4 billion
Up)
Southwest Airlines (NYSE: LUV) announced Monday that it has agreed to acquire AirTran Holdings Inc. (NYSE: AAI), the parent company of AirTran Airways, in a cash and stock deal that values the company at about $1.4 billion, including convertible notes.
The deal values AirTran at $7.69 per share, based on the closing price of Southwest shares on Friday. The acquisition represents a 69 percent premium over the closing price on Friday of Air Tran shares, at $4.55.
The deal will be worth approximately $3.4 billion including AirTran’s Debt.
Under the terms of the agreement, stockholders of AirTran will receive $3.75 in cash and 0.321 shares of Southwest for each share of common stock owned.
"This acquisition creates more jobs and career opportunities for our combined Employee groups, as a whole. It allows us to better respond to the economic and competitive challenges of our industry, and fits perfectly within our strategy for our fifth decade of service,” said Gary C. Kelly, Chairman, President, and CEO of Southwest Airlines. It presents us the opportunity to extend our service to many smaller domestic cities that we don't serve today, and provides access to key near-international leisure markets in the Caribbean and Mexico. Finally, this accelerates our goal to boost profits and achieve our financial targets."
The deal comes about a week after Continental Airlines Inc. (NYSE: CAL) and UAL Corp. (NASDAQ: UAUA) combined amid consolidation that has occurred industrywide.
Shares of AirTran are up 64.84 percent to $7.50 in premarket trade on Monday, while shares of Southwest are down 9 cents to $12.19.
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The deal values AirTran at $7.69 per share, based on the closing price of Southwest shares on Friday. The acquisition represents a 69 percent premium over the closing price on Friday of Air Tran shares, at $4.55.
The deal will be worth approximately $3.4 billion including AirTran’s Debt.
Under the terms of the agreement, stockholders of AirTran will receive $3.75 in cash and 0.321 shares of Southwest for each share of common stock owned.
"This acquisition creates more jobs and career opportunities for our combined Employee groups, as a whole. It allows us to better respond to the economic and competitive challenges of our industry, and fits perfectly within our strategy for our fifth decade of service,” said Gary C. Kelly, Chairman, President, and CEO of Southwest Airlines. It presents us the opportunity to extend our service to many smaller domestic cities that we don't serve today, and provides access to key near-international leisure markets in the Caribbean and Mexico. Finally, this accelerates our goal to boost profits and achieve our financial targets."
The deal comes about a week after Continental Airlines Inc. (NYSE: CAL) and UAL Corp. (NASDAQ: UAUA) combined amid consolidation that has occurred industrywide.
Shares of AirTran are up 64.84 percent to $7.50 in premarket trade on Monday, while shares of Southwest are down 9 cents to $12.19.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
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