US Airways Group has increased its offer to merge with Delta Air Lines with offer valued at $12.7 to 15.4 billion and set to expire on February 1, 2007 if there is…
US Airways Group has increased its offer to merge with Delta Air Lines with offer valued at $12.7 to 15.4 billion and set to expire on February 1, 2007 if there is absent creditor support.
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.
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.
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