US Airways offer for Delta now $8.867 billion

[USA320Pilot]

US Airways' stock price is up $2.54 in pre-market electronic trading to trade at $62 per share. At this price the offer to acquire Delta is $8.867 billion, with $4 billion in cash of $4.867 billion in stock.

I believe as the stock price appreciates, the pressure will mount on Delta's board and its creditor's committee to accept US Airways' offer.

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Regards,

USA320Pilot

 

[USA320Pilot]

If US Airways' stock price climbs to $63.70 the Delta offer would grow to $9 billion. I'm sure the stock price will be a topic of discussion today when Delta tells its bankruptcy creditors why they should reject the hostile merger bid.

With Delta and US Airways active in merger discussions, United and Continental in discussions, Northwest holding a golden-share provision in Continental that could block a Continental merger, and Northwest hiring Evercore Partners to explore "broad strategic alternatives in the airline industry," including the possibility of a merger or acquisition, who knows how this will all end up.

In my opinion, Boeing, US Airways and Northwest hold most of the cards. US Airways' offer is rich, it appears to have the backing of both the Stock and Bond market, and Northwest holds the key to Continental's future.

For US Airways and Delta, the key player could be Boeing.

According to yesterday's Wall Street Journal, despite long business relationships with Delta and its management, some major creditors such as Boeing Co., whose Boeing Capital Corp. unit leads the committee and holds claims in excess of $117.5 million, may feel obligated to insist on a full hearing of the offer, say people familiar with the situation. That could force the creditors committee to demand that Delta open its financial records and enter into full due diligence with US Airways, of Tempe, Ariz.

Delta has lobbied the Chicago aircraft maker for its support in warding off US Airways. People familiar with the discussions said Boeing has decided to remain neutral while the offer is being evaluated.

In my opinion, Ted Reed of TheStreet.com wrote an informative column titled "Boeing in the Catbird Seat." Why? As Reed noted, for Boeing, "It's Monty Hall and 'Let's Make a Deal,'" said Scott Hamilton, who publishes an online newsletter about Airbus and Boeing. For the longer term, if US Airways succeeds in acquiring Delta through a hostile takeover, a round of aircraft buying could result, further benefiting Boeing as well as rival Airbus.

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My guess: US/DL & NW/CO combine and AA & UA remain independent.

Regards,

USA320Pilot

 

[chevyman]

If US Airways' stock price climbs to $63.70 the Delta offer would grow to $9 billion. I'm sure the stock price will be a topic of discussion today when Delta tells its bankruptcy creditors why they should reject the hostile merger bid.

With Delta and US Airways active in merger discussions, United and Continental in discussions, Northwest holding a golden-share provision in Continental that could block a Continental merger, and Northwest hiring Evercore Partners to explore "broad strategic alternatives in the airline industry," including the possibility of a merger or acquisition, who knows how this will all end up.

In my opinion, Boeing, US Airways and Northwest hold most of the cards. US Airways' offer is rich, it appears to have the backing of both the Stock and Bond market, and Northwest holds the key to Continental's future.

For US Airways and Delta, the key player could be Boeing.

According to yesterday's Wall Street Journal, despite long business relationships with Delta and its management, some major creditors such as Boeing Co., whose Boeing Capital Corp. unit leads the committee and holds claims in excess of $117.5 million, may feel obligated to insist on a full hearing of the offer, say people familiar with the situation. That could force the creditors committee to demand that Delta open its financial records and enter into full due diligence with US Airways, of Tempe, Ariz.

Delta has lobbied the Chicago aircraft maker for its support in warding off US Airways. People familiar with the discussions said Boeing has decided to remain neutral while the offer is being evaluated.

In my opinion, Ted Reed of TheStreet.com wrote an informative column titled "Boeing in the Catbird Seat." Why? As Reed noted, for Boeing, "It's Monty Hall and 'Let's Make a Deal,'" said Scott Hamilton, who publishes an online newsletter about Airbus and Boeing. For the longer term, if US Airways succeeds in acquiring Delta through a hostile takeover, a round of aircraft buying could result, further benefiting Boeing as well as rival Airbus.

See Story

My guess: US/DL & NW/CO combine and AA & UA remain independent.

Regards,

USA320Pilot

Just remember stock markets go up and down on a regular basis. This is only speculation at this point and stock market merger hype only. LCC will go back down into the high 40's or low 50's after the merger ballon burst. The fact of the matter is Delta mgt still has the exclusive right to produce a re-organization plan prior to Feb. They can count also and will have to sweeten the deal even more. So until that occurrs everthing is 100% speculation and that is exactly what LCC stock is operating off of now and nothing else.

 

[BoeingBoy]

Just remember stock markets go up and down on a regular basis.

How true....

LCC stock is back below $60 - $59.40 at the last tick. Maybe DL's creditors will view the merger offer dimly for fear the price will keep dropping......

Jim

 

[USA320Pilot]

As an active trader and investor who is successful in the markets, I fully understand price action and market dynamics, especially with US Airways' security hovering around $60 per share and once again up regular trading. Today's market volatily is interesting, but one point is clear. US Airways' security had a closing price on Nov. 14 (the day before the hostile takeover bid was announced) of $50.93 and today is trading up again in regular hours up .34 cents at "$59.80 at the last tick", representing a significant premium over the merger offer.

Furthermore, the bond market and a group of Delta unsecured creditors have formed an unofficial committee to represent their interests, which is being led by Deutsche Bank Securities and Lehman Brothers. Apparently, the new group is expected to put added pressure on Delta to fully consider the US Airways bid as an alternative to its stand-alone strategy and have filed a motion with the bankruptcy court requesting information on the "formal reorganization".

And, according the yesterday's Wall Street Journal, today Delta will meet with its major creditors in a new round of talks regarding the US Airways bid. The Journal noted, the "meeting of creditors could increase pressure on Delta to open its books," which could begin the due diligence process.

Meanwhile for more information on industry stock prices, today's appreciation, and the market's reaction to pending airline industry (M&A) activity click onto the following link:

Airline Stocks Take Off

Regards,

USA320Pilot

 

[Bear96]

They had better for US's sake. Now that DP has kick started the consolidation frenzy he could end up odd man out unless he has another dance partner waiting in the wings.

I had that thought too, that maybe DP didn't appreciate the magnitude of what he put in motion. If the deal doesn't work out, but other deals happen leaving LCC the odd man out, DP only has himself to blame. Oops.

Let's hope he knows what he is doing.

 

[BoeingBoy]

As an active trader and investor who is successful in the markets, I fully understand price action and market dynamics....

Yet chose to enthuse over an intraday move, in pre-market trading, no less. Ignoring all that "understanding"....

Furthermore, the bond market and a group of Delta unsecured creditors have formed an unofficial committee to represent their interests

Oddly, I missed the report that the "bond market" had joined that short list of relatively minor unsecured creditors that make up the unofficial committee of unsecured creditors....

Jim

 

[Gilding the Lily]

.

Furthermore, the bond market and a group of Delta unsecured creditors have formed an unofficial committee to represent their interests, which is being led by Deutsche Bank Securities and Lehman Brothers. Apparently, the new group is expected to put added pressure on Delta to fully consider the US Airways bid as an alternative to its stand-alone strategy and have filed a motion with the bankruptcy court requesting information on the "formal reorganization".

Regards,

USA320Pilot

The "Unofficial Committee of Unsecured Claim holders" has yet to file a motion in the Delta bankruptcy. The group has retained a law firm to represent them. Although the firm has not filed a motion, it has filed an appearance and requested the copies of past pleadings and notices.

Interestingly, the law firm specifically requested from the court an opportunity to supplement its statement "when additional members join the Unofficial Committee." I suppose that this committee knows, or believes, that other claim holders will jump on to that ship.

As of 5 days ago , the committee inlcuded the following:
* Avenue Capital Management
* CarVal Investors, LLC
* Deutsche Bank Securities, Inc.
* GoldenTree Asset Management LP
* Lehman Brothers Inc.
* Lehman Commercial Paper Inc.
* Marathon Asset Management
* Marathon Special Opportunities Fund, LP
* Silver Point Capital, LP
* Trafelet & Co. LLC
* York Capital Management

Looking at these claim holders, I find it interesting that most of these creditors are Investment Banks and Capital Management firms. I wonder if any creditors with claims based on rejected service contracts will join?

 

[aquagreen73s]

LCC won't be the odd man out. During the exclusivity period LCC could pretty much revoke the DAL offer because there won't be any reliance by the DAL creditors. Once the creditors look at the DAL reorganization and vote it down, however, LCC might then be stuck with their offer. But that would be fine too because Doug then would have gotten the deal he knows will work. The pressure is really on NWAC at this point because they are the ones with no prom date as of yet. They've got to play this UAL thing carefully because as I understand their right of first refusal, NWAC can only block an acquisition of CAL, not BY CAL. That could very well turn into a food fight among the lawyers who will argue it is/isn't an acquisition. Finally, the worst case scenario is LCC stays the way it is which really wouldn't be all that bad either. We can make it as is.

 

[USA320Pilot]

BoeingBoy:

Market price action is market price action. Does it matter if its pre/after market electronic trading or intraday NYSE action? The issue is that investors are bidding up the security because they believe in the speculation and the company's fundamentals, period.

The point is during most M&A activity the security of the acquiring company goes down, but in this case for US Airways it has gone up considering the price immediately before the takeover announcement. Moreover, the bond market is indicating their preference for US Airways' bid too.

Let's be honest here. You do not like me and I do not like you.

Because I have publicly accused you of effectively being a Chameleon and misrepresenting information on the US Airways ALPA and other message boards; as well as supporting the ALPA RC4's destructive efforts during LOA 93 negotiations, you do not like me and you purposely try to discredit me.

That's fine, but when would now be a good time to grow up, especially in your retirement since you're no longer a US Airways employee?

Regards,

USA320Pilot

 

[Gilding the Lily]

Furthermore, the bond market and a group of Delta unsecured creditors have formed an unofficial committee to represent their interests
Regards,
USA320Pilot

Oddly, I missed the report that the "bond market" had joined that short list of relatively minor unsecured creditors that make up the unofficial committee of unsecured creditors....

Jim

When I read "Bond Market," I assumed that USA320Pilot meant the tax-exempt bondholders, both institutional holders and broker-dealers, who were also organizing an unofficial creditors committee. Pilot... correct me if I am wrong.

BoeingBoy, I have a strong suspicion that you also know what 'Pilot' meant.

 

[CapnCockroach]

BoeingBoy:
Because I have publicly accused you of effectively being a Chameleon and misrepresenting information on the US Airways ALPA and other message boards; as well as supporting the ALPA RC4's destructive efforts during LOA 93 negotiations, you do not like me and you purposely try to discredit me.

That's fine, but when would now be a good time to grow up, ...

Is that true? 😱

 

[Cosmo]

... United and Continental in discussions, Northwest holding a golden-share provision in Continental that could block a Continental merger, ...

It is my understanding that this "Golden Share" provision effectively goes away with a reorganization or recapitalization of Northwest. Given that Northwest is currently in Chapter 11 reorganization proceedings and its current stock will almost certainly be cancelled as part of its POR, a recapitalization of the carrier is virtually guaranteed. Thus, the "Golden Share" provision should soon be eliminated along with Northwest's ability to veto a Continental merger with United or any other carrier. IMHO, United and Continental are simply waiting for Northwest to file its POR, with the nearly certain confirmation that its current stock will be cancelled, before formally announcing their own merger plans.

The real importance of the elimination of Northwest's "Golden Share" is that it allows United to be the surviving corporate entity in any merger with, or acquisition of, Continental (regardless of where the post-merger management comes from or where the headquarters will be located). This eliminates any successorship issues with regard to the merged carrier's ability to continue serving LHR and retain beyond-NRT local traffic rights, thus removing the need for potentially protracted and possibly unsuccessful governmental negotiations with the U.K. and Japan, respectively, to allow United's rights to be assumed by another carrier.

In my opinion, Boeing, US Airways and Northwest hold most of the cards.

I believe my comments above invalidate this quote insofar as it relates to Northwest.

 

[Gilding the Lily]

It is my understanding that this "Golden Share" provision effectively goes away with a reorganization or recapitalization of Northwest. Given that Northwest is currently in Chapter 11 reorganization proceedings and its current stock will almost certainly be cancelled as part of its POR, a recapitalization of the carrier is virtually guaranteed. Thus, the "Golden Share" provision should soon be eliminated along with Northwest's ability to veto a Continental merger with United or any other carrier. IMHO, United and Continental are simply waiting for Northwest to file its POR, with the nearly certain confirmation that its current stock will be cancelled, before formally announcing their own merger plans.

Cosmo,

Doesn't Northwest hold a "golden share" of Continental? In my limited knowledge of "golden shares," I would assume that Northwest doesn't hold its own "golden share," but rather, it holds a "golden share" IN Continental.

Thus, it would not matter if NW's current stock is cancelled or adjusted, as the share is tied to Continental, not Northwest.

 

[USA320Pilot]

Cosmo:

I do not know how the “golden share†provision would affect Northwest’s ability to block a Continental merger. What I do know is that two respected airline analysts told me that Northwest could block a deal between Continental and another airline.

Yesterday, CBS MarketWatch indicated “Northwest could use its preferred Continental stock to block a UAL-Continental merger, the (Wall Street) Journal reported.

See Story

Furthermore, the New York Times reported, “any effort by the two to merge would be complicated by an agreement Continental has with Northwest Airlines. The agreement could allow Northwest to block certain merger transactions involving Continental, but could allow Continental more freedom to enter into a combination if it was the acquiring party and approval of its shareholders was not required.â€

See Story

Rueters also noted, “any merger involving Continental has an added complication. Bankrupt Northwest Airlines holds a so-called "golden share" in the airline, giving it the right to block mergers involving Continental.â€

See Story

Finally, I read in another column that the “golden share†provision has been a major point of conversation between Glenn Tilton and Larry Kellner.

Regards,

USA320Pilot