Acquisitions

When United and Continental Airlines confirmed in May that they have agreed to merge in a share swap deal which will create the world’s largest carrier, no one expected it would take that long. While boards of directors of both companies approved this merge unanimously, they still need approval from shareholders of the two carriers and also US anti-trust authorities. Although EU’s anti-monopoly monitors already approved this merger on Tuesday, there is bigger danger from US authorities’ quarter, as they turned down a United-US Airways deal in 2001. The new merged giant will keep the United name and maintain its headquarters in Chicago. If everything goes w! ell, airline will account for seven percent of global airline capacity, what will bring it ahead of US rival Delta with its six percent. The combined company will also have a 21 percent share of the huge US air market, what represents annual revenues of approximately 29 billion dollars. An unrestricted cash balance of about $4.7 billion is bad neither. Expectations of $1 to $1.2 billion dollars delivered in net annual gains by 2013 are quite brave, as merge is not completely approved. As Glenn Tilton, president and chief executive officer of UAL Corp. said: “This combination will provide strong platform for sustainable, long-term value for shareholders, opportunities for employees, and more and better scheduled service and destinations for customers.” European Commission informed that “the transaction would not significantly impede effective competition” in Europe and both networks are “complementary as they have hubs in different US cities.! 221; The new airline, if US anti-trust authorities agree the m! erger, w ill serve more than 144 million passengers per year with 270 destinations in 59 countries.

related story (sgx17912): http://www.france24.com/en/20100727-eu-approves-worlds-bigge...

by Barbora Misakova for Cantell TV (http://cantell.tv)

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