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Alaska Air (ALK) Inks $1.9B Deal to Buy Hawaiian Airlines
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Alaska Air Group (ALK - Free Report) inked a deal with Hawaiian Holdings (HA - Free Report) to acquire HA for $18 per share in cash, in a bid to expand its network. The transaction is valued at approximately $1.9 billion. This includes $900 million of Hawaiian Airlines debt.
The price offers an attractive premium for HA shareholders (HA closed session at $4.86 per share on Friday). The deal is expected to be accretive to ALK’s earnings within two years post-closure with at least $235 million of expected run-rate synergies.
In the event of deal materializing, Alaska Air’s fleet will expand to 365 narrow and wide body planes. They will serve 138 destinations in total, including non-stop service to 29 top international destinations in the Americas, Asia, Australia and the South Pacific. This deal is regarded to be customer-friendly as it is anticipated to expand choice for consumers on the U.S. west coast and the Hawaiian Islands. Honolulu will become a key hub for the combined entity.
The combined entity will be based in Seattle. It will be led by Ben Minicucci, the CEO of Alaska Airlines. A dedicated leadership team will be formed to plan out a successful and seamless integration process.
Even after the deal closure, both companies will maintain their respective brands. The news of the buyout offers a big relief to HA. The stock has fallen significantly in a year’s time, mainly due to slow recovery in air-travel demand between Asia and Hawaii.
The transaction has gained approval from the boards of both companies. However, materialization of the buyout is dependent on required regulatory approvals, Hawaiian Holdings shareholders’ approval (expected to be sought in the first quarter of 2024) and other customary closing conditions. After all these steps, the deal is expected to close in 12-18 months.
However, it will be interesting to see whether the deal ultimately materializes, given the hard stance adopted by federal regulators on airline mergers. Notably, an antitrust trial is debating on JetBlue Airways’ (JBLU - Free Report) planned acquisition of Spirit Airlines (SAVE - Free Report) . During the trial, a lawyer from the U.S. Department of Justice urged a federal judge to block JetBlue's intended $3.8-billion acquisition of Spirit Airlines, in an effort to preserve competition among the lowest-cost carriers. This is to ensure that air travel remains affordable.
The Justice Department believes that if the deal materializes, it would lead to fewer flights and seats, and higher prices. Meanwhile, JetBlue has termed the deal as consumer friendly.
Zacks Rank
Alaska Air currently carries a Zacks Rank #5 (Strong Sell). HA carries a Zacks Rank #4 (Sell), currently.
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Alaska Air (ALK) Inks $1.9B Deal to Buy Hawaiian Airlines
Alaska Air Group (ALK - Free Report) inked a deal with Hawaiian Holdings (HA - Free Report) to acquire HA for $18 per share in cash, in a bid to expand its network. The transaction is valued at approximately $1.9 billion. This includes $900 million of Hawaiian Airlines debt.
The price offers an attractive premium for HA shareholders (HA closed session at $4.86 per share on Friday). The deal is expected to be accretive to ALK’s earnings within two years post-closure with at least $235 million of expected run-rate synergies.
In the event of deal materializing, Alaska Air’s fleet will expand to 365 narrow and wide body planes. They will serve 138 destinations in total, including non-stop service to 29 top international destinations in the Americas, Asia, Australia and the South Pacific. This deal is regarded to be customer-friendly as it is anticipated to expand choice for consumers on the U.S. west coast and the Hawaiian Islands. Honolulu will become a key hub for the combined entity.
The combined entity will be based in Seattle. It will be led by Ben Minicucci, the CEO of Alaska Airlines. A dedicated leadership team will be formed to plan out a successful and seamless integration process.
Even after the deal closure, both companies will maintain their respective brands. The news of the buyout offers a big relief to HA. The stock has fallen significantly in a year’s time, mainly due to slow recovery in air-travel demand between Asia and Hawaii.
The transaction has gained approval from the boards of both companies. However, materialization of the buyout is dependent on required regulatory approvals, Hawaiian Holdings shareholders’ approval (expected to be sought in the first quarter of 2024) and other customary closing conditions. After all these steps, the deal is expected to close in 12-18 months.
However, it will be interesting to see whether the deal ultimately materializes, given the hard stance adopted by federal regulators on airline mergers. Notably, an antitrust trial is debating on JetBlue Airways’ (JBLU - Free Report) planned acquisition of Spirit Airlines (SAVE - Free Report) . During the trial, a lawyer from the U.S. Department of Justice urged a federal judge to block JetBlue's intended $3.8-billion acquisition of Spirit Airlines, in an effort to preserve competition among the lowest-cost carriers. This is to ensure that air travel remains affordable.
The Justice Department believes that if the deal materializes, it would lead to fewer flights and seats, and higher prices. Meanwhile, JetBlue has termed the deal as consumer friendly.
Zacks Rank
Alaska Air currently carries a Zacks Rank #5 (Strong Sell). HA carries a Zacks Rank #4 (Sell), currently.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.