US Ups Delta Offer
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Flying Titan
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US Airways Raises Offer for Delta Air Lines
Offer Valued at $12.7 to 15.4 Billion and Set to Expire on February 1, 2007 Absent Creditor Support
TEMPE, Ariz., Jan 10, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- US Airways Group, Inc. (NYSE: LCC) today announced that it has increased its offer to merge with Delta Air Lines, Inc. (OTC: DALRQ). Under the revised proposal:
* Delta's unsecured creditors would receive $5.0 billion in cash and
89.5 million shares of US Airways stock.
* When applying the same valuation methodology and assumptions as
described in Delta's Disclosure Statement, US Airways' advisor
Citigroup estimates this new proposal will provide between $12.7 and
15.4 billion in value to Delta's unsecured creditors, which represents
a significant premium over the $9.4 to 12.0 billion valuation that
Delta places on its stand-alone plan.
* Based on the closing price of US Airways stock as of Tuesday,
Jan. 9, 2007, the new proposal has a current market value of
approximately $10.2 billion.
The merger is expected to be accretive to US Airways' earnings per share in the first full year after completion of the merger.
The increased offer is set to expire on Feb. 1, 2007 unless there is affirmative creditor support for commencement of due diligence, making the required filings under Hart-Scott-Rodino, as well as the postponement of Delta's hearing on its Disclosure Statement scheduled for Feb. 7, 2007.
US Airways has committed financing from Citigroup and Morgan Stanley for the proposed transaction for $8.2 billion, representing $5.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing existing obligations at both US Airways and Delta.
US Airways Chairman and Chief Executive Officer Doug Parker stated, "While our original proposal offered substantially more value to Delta's unsecured creditors than the Delta stand-alone plan, we are making this revised offer to eliminate any doubt that a merger with US Airways offers Delta's unsecured creditors significantly more value. Without the support of the creditors, our offer is set to expire on Feb. 1. It is time for this process to move forward. We continue to believe that this is the right time to create a better airline that provides more choice to consumers, increased job security for both airlines' employees and generates more value for all of our stakeholders."
Consumers across the nation will benefit from greater choice and lower fares from the "New" Delta. Since the combination of America West and US Airways in 2005, US Airways has lowered leisure and business fares by up to 83 percent in about 1,000 markets. Every domestic destination served today by either US Airways or Delta will continue to be served by the New Delta, which will provide consumers across the nation access to a larger network that connects them to more people and places.
Employees also will benefit from working for a larger and more competitive airline. As US Airways has already announced, frontline employees of the New Delta will move to the higher cost structure of the combined airlines, and there will be no furloughs of frontline employees of either Delta or US Airways. The combination of US Airways and America West, which was accomplished without any involuntary mainline furloughs despite capacity reductions of 15 percent, demonstrates that a merger can be in the best interests of employees, not just shareholders.
"This is a transaction that makes sense for US Airways stockholders, Delta creditors, the employees and customers of both companies, and the communities that we serve," said Parker.
The revised US Airways proposal retains the same conditions as the original offer and is conditioned on satisfactory completion of a due diligence investigation, which the Company believes can be completed expeditiously, approval by Delta's Bankruptcy Court of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals, and the approval of the shareholders of US Airways.
Citigroup Corporate and Investment Banking is acting as financial advisor to US Airways, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as primary legal counsel, with Fried, Frank, Harris, Shriver & Jacobson LLP as lead antitrust counsel to US Airways.
Offer Valued at $12.7 to 15.4 Billion and Set to Expire on February 1, 2007 Absent Creditor Support
TEMPE, Ariz., Jan 10, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- US Airways Group, Inc. (NYSE: LCC) today announced that it has increased its offer to merge with Delta Air Lines, Inc. (OTC: DALRQ). Under the revised proposal:
* Delta's unsecured creditors would receive $5.0 billion in cash and
89.5 million shares of US Airways stock.
* When applying the same valuation methodology and assumptions as
described in Delta's Disclosure Statement, US Airways' advisor
Citigroup estimates this new proposal will provide between $12.7 and
15.4 billion in value to Delta's unsecured creditors, which represents
a significant premium over the $9.4 to 12.0 billion valuation that
Delta places on its stand-alone plan.
* Based on the closing price of US Airways stock as of Tuesday,
Jan. 9, 2007, the new proposal has a current market value of
approximately $10.2 billion.
The merger is expected to be accretive to US Airways' earnings per share in the first full year after completion of the merger.
The increased offer is set to expire on Feb. 1, 2007 unless there is affirmative creditor support for commencement of due diligence, making the required filings under Hart-Scott-Rodino, as well as the postponement of Delta's hearing on its Disclosure Statement scheduled for Feb. 7, 2007.
US Airways has committed financing from Citigroup and Morgan Stanley for the proposed transaction for $8.2 billion, representing $5.0 billion to fund the cash portion of the offer and $3.2 billion in refinancing existing obligations at both US Airways and Delta.
US Airways Chairman and Chief Executive Officer Doug Parker stated, "While our original proposal offered substantially more value to Delta's unsecured creditors than the Delta stand-alone plan, we are making this revised offer to eliminate any doubt that a merger with US Airways offers Delta's unsecured creditors significantly more value. Without the support of the creditors, our offer is set to expire on Feb. 1. It is time for this process to move forward. We continue to believe that this is the right time to create a better airline that provides more choice to consumers, increased job security for both airlines' employees and generates more value for all of our stakeholders."
Consumers across the nation will benefit from greater choice and lower fares from the "New" Delta. Since the combination of America West and US Airways in 2005, US Airways has lowered leisure and business fares by up to 83 percent in about 1,000 markets. Every domestic destination served today by either US Airways or Delta will continue to be served by the New Delta, which will provide consumers across the nation access to a larger network that connects them to more people and places.
Employees also will benefit from working for a larger and more competitive airline. As US Airways has already announced, frontline employees of the New Delta will move to the higher cost structure of the combined airlines, and there will be no furloughs of frontline employees of either Delta or US Airways. The combination of US Airways and America West, which was accomplished without any involuntary mainline furloughs despite capacity reductions of 15 percent, demonstrates that a merger can be in the best interests of employees, not just shareholders.
"This is a transaction that makes sense for US Airways stockholders, Delta creditors, the employees and customers of both companies, and the communities that we serve," said Parker.
The revised US Airways proposal retains the same conditions as the original offer and is conditioned on satisfactory completion of a due diligence investigation, which the Company believes can be completed expeditiously, approval by Delta's Bankruptcy Court of a mutually agreeable plan of reorganization that would be predicated upon the merger, regulatory approvals, and the approval of the shareholders of US Airways.
Citigroup Corporate and Investment Banking is acting as financial advisor to US Airways, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as primary legal counsel, with Fried, Frank, Harris, Shriver & Jacobson LLP as lead antitrust counsel to US Airways.
OP
BoeingBoy
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- Nov 9, 2003
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Parker interviewed on CNBC's squawk box:
Claims offer is $12.7 - $15.4 billion if valued like DL's valuation.
Wants creditors to take some affirmative step by Feb 1 and defer hearing scheduled for feb 7.
The usual - merger will be good for comsumers, sail thru regulators, etc
Jim
Claims offer is $12.7 - $15.4 billion if valued like DL's valuation.
Wants creditors to take some affirmative step by Feb 1 and defer hearing scheduled for feb 7.
The usual - merger will be good for comsumers, sail thru regulators, etc
Jim
luv2fly
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- Aug 21, 2002
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As much as I don't/didn't want this merge, it is becoming painfully obvious that Parker will sell his soul in order to obtain this deal.
It is also apparent that the creditors will most likely go along with this as the amount of money being offered is getting ridiculous.
Now my concern becomes, how much can US really afford to pay? When does this turn in to a battle of egos to see who wins only to realize that you paid too much?
15 Billion is a hefty chunk of change. Let's all hope the employees of the new Delta don't end up financing it for the next trip to BK.
Gilding the Lily
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- Oct 30, 2006
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I knew there was going to come a day when US would have to "up" their offer. I wasn't sure if 'that day' was going to come before a plan could be presented on US's behalf. Apparently, that day has come now.
Obviously, US could not wait until another plan was able to be filed. Remember, Parker always said: "We will just sit and wait until it is clear to us that the bankruptcy process is getting to the point where it could fall in DL's favor." That favor has started to show its head.
Putting a conditional deadline on the bid is an excellent strategy. As it stands, the exclusive period to file a DL plan tolls on February 15th, its exclusive period to gain creditor approval of the plan tolls on April 16th. One of the conditions is gaining creditor support postpone the Disclosure statement hearing on February 7th. Importantly, DL cannot officially solicit acceptances on the plan without approval of the disclosure statement. Therefore, influencing creditors to delay the bankruptcy process will give US much more leverage throughout the rest of the bankruptcy process. And it should go without debate, that extra cash is a great incentive to postpone the proceedings to DL's disadvantage.
usair_begins_with_u
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- May 9, 2004
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Hard to imagine there is much left to gain if they are offering a 20% premium over the last offer. Some one else said it best on another thread, this is all about ego. I'm not quite sure who's getting tossed under the bus yet, but it may very well be the existing LCC shareholders, while rank and file employees will likely get more stability.
You have to stop and give Mr. Parker a lot credit. To convince all these diverse groups how great the merger would be, when likely all it will do is give him a larger empire to rule over, frankly is quite impressive. The guy is a genius, and a masterful leader. I was never a big fan, but now I admire him. I'd work for a guy like that for free.. But then again, many of you guys are almost doing that anyways.
You have to stop and give Mr. Parker a lot credit. To convince all these diverse groups how great the merger would be, when likely all it will do is give him a larger empire to rule over, frankly is quite impressive. The guy is a genius, and a masterful leader. I was never a big fan, but now I admire him. I'd work for a guy like that for free.. But then again, many of you guys are almost doing that anyways.
Harry Callahan
Veteran
Rueters had this article.Link
With this quote:
They seem to have the financial backing for this, that's for sure... As to the ability to pay things off later, that depends on the one reason behind (and question to be answered with) this merger...
"Will the new Delta have pricing power in it's marketplace"
Answer that question, and it will answer yours...
Jimmy Neutron
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- Dec 2, 2005
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Amazing, this management team of ours....
At our station again they just cut down the hours of the part-time workers claiming the over-budget excuse while at the same time we barely have enough people to work the flights...
But amazingly they continue to worry about everything else except our own employees and customers....And consitently have money for exec. bonuses and a merger that will put this company in over 20 billion in debt.....
What a joke....
The only ones that will benefit from this merger are the upper management, with millions in bonuses and the stockholders.
As usual the employees will be left holding the bag with mass layoffs/transfers and years of impending uncertainty..
I say....
KEEP DELTA THEIR DELTA
:down:
phasersonstun2
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- May 1, 2003
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OK, at first the offer is too little. Now the offer is too much. This is getting rediculous.
We at USAirways (east) are a hard working, dedicated group of men and women that have been through hell and back, using the backroads.
If we can make it through the mergers, crashes, and bankruptcies, I think that we can handle the "new Delta" and make it work. Please stop second guessing us. We're way tougher than you know.
IMisstheAladdinTrays
Veteran
AMEN!
iheartairbus
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- Aug 31, 2006
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Similar to the one that's been hovering outside PIT for the last 4 years?
