Friday, April 9, 2010

United Airlines, US Airways Merger Could Be All-Stock Deal

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 companies see more than USD$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.