Alaska Air Group to Acquire Hawaiian Holdings in $1.9 Billion Deal
In a significant move towards industry consolidation, Alaska Air Group has announced its plans to acquire Hawaiian Holdings, the parent company of Hawaiian Airlines, for a whopping $1.9 billion, including assumed debt. The deal, which includes a cash payment of $18 per share, represents a whopping 270% premium from Hawaiian Holdings’ Friday closing price.
This news has sent shockwaves through the stock market, with Hawaiian Holdings’ stock nearly tripling in premarket trading following the announcement. However, on the flip side, Alaska Air Group’s stock took a hit, tumbling more than 10%.
In addition to the financial implications, this acquisition has other consequences. S&P Dow Jones Indices has made the decision to remove Alaska Air Group from the prestigious S&P 500 index and instead add it to the S&P SmallCap 600. This move reflects the changing landscape of the airline industry and the impact this deal will have on Alaska Air Group’s market position.
Alaska Air Group is confident that this acquisition will bring about $235 million in conservative run-rate synergies. Furthermore, they anticipate high-single-digit earnings accretion within the first two years. Clearly, the company is aiming to enhance its profitability and broaden its market share through this strategic move.
This acquisition is part of an ongoing trend in the airline industry where companies are actively seeking consolidation opportunities. JetBlue Airways is currently pursuing a takeover of Spirit Airlines, a move that has faced challenges from the Justice Department. As the competition heightens and the industry continues to evolve, it seems that the key players are willing to take bold steps to secure their positions in the market.
The transaction between Alaska Air Group and Hawaiian Holdings is expected to close in the second quarter of 2022, subject to regulatory approvals and customary closing conditions. This deal will undoubtedly shape the future of both companies and have a lasting impact on the airline industry as a whole.
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