Deal Is Still Subject To Regulatory Approval
AirTran Holdings, Inc., the parent company of AirTran Airways,
announced Monday that it has entered into a definitive merger
agreement to be acquired by Southwest Airlines in a transaction
currently valued at more than $1.37 billion. Including existing
AirTran Holdings, Inc., indebtedness and capitalized aircraft
operating leases, the aggregate transaction value is approximately
$3.42 billion.
Under the terms of the agreement, shareholders of AirTran
Holdings, Inc., will receive a combination of Southwest common
stock and cash valued between $7.25 and $7.75, depending upon the
average trading price of Southwest stock for a 20 trading day
period to and including three trading days prior to the closing of
the merger. At least $3.75 of the merger consideration will
be in cash. The stock portion of the consideration will be
0.321 shares of Southwest common stock for each share of AirTran
common stock, unless the trading price of Southwest common stock
would cause the overall merger consideration to exceed $7.75 per
share (in which case the number of Southwest shares will be
decreased so that the consideration equals $7.75 per AirTran share)
or would cause the overall merger consideration to be less than
$7.25 per share (in which case additional cash, Southwest shares or
a combination of the two will be added so that the consideration
equals $7.25 per share).
Based on Southwest Airlines' closing share price as of September
24, 2010, the value of the merger consideration would be $7.69 per
AirTran share. This represents a 69 percent premium over the
September 24, 2010, closing price of AirTran stock.
The two airlines currently serve 106 communities from
coast-to-coast, Mexico and the Caribbean, with 685 all-Boeing
aircraft and nearly 43,000 employees.
"This agreement is great news for our Crew Members, our
shareholders, our customers and the communities we serve. Joining
Southwest Airlines will give us opportunities to grow, both
professionally as individuals and as a group, in ways that simply
would not be possible without this agreement," said Bob Fornaro,
AirTran Airways' chairman, president and chief executive officer.
"This agreement with Southwest is a testament to the success and
hard work of the more than 8,000 AirTran Crew Members who have
built this airline. I am tremendously proud of the things we have
accomplished together and look forward to continuing that great
work during this next exciting chapter of our history."
The companies say the combined airline will benefit from greater
economies of scale and the integration of operations will be aided
by significant fleet commonality. The result, they
say, will be an airline that is better prepared to meet the
challenges of an increasingly competitive airline environment and
take advantage of strategic opportunities.
"Both companies have dedicated people with kindred Warrior
Spirits, who care about each other, and who care about serving
Customers. We will continue to enhance our award-winning Customer
experiences and high-quality operations," said Gary Kelly,
Southwest Airlines' chairman, president, and chief executive
officer. "We believe this deal can benefit all Stakeholders through
an expansion of low fares for Customers, opportunities for
Employees of both companies and for suppliers and vendors, and
favorable returns for Shareholders. Ultimately, we want to spread
low fares farther and look forward to working together with
AirTran's Crew Members to realize the new opportunities we expect
to achieve from this deal."
The AirTran Board of Directors, on the unanimous recommendation
of a Special Committee of independent directors, approved the
merger agreement and recommends that AirTran Holdings, Inc.,
shareholders approve the transaction.
Completion of the transaction, which will require both
regulatory and shareholder approvals, is expected to close by the
first half of 2011. Commercial and operating integration is slated
to culminate in 2012, with both carriers operating under Southwest
Airlines' Federal Aviation Administration operating certificate in
Dallas.