U.S. Airways Offers $8 B for Delta

Elena
15 Nov, 2006
New York City

US Airways said the offer is a 25% premium over the current trading price of Delta''s pre-petition unsecured claims as of Tuesday, and a 40% premium over the average trading price for Delta unsecured claims over the last 30 days. US Airways said it would be financially supported by Citigroup Inc.

[R]8:00AM U.S. Airways Group offered $8 billion for Delta Air Lines.[/R]
US Airways Group Inc. announced Wednesday that it had offered $8 billion to buy Delta Air Lines in a cash-and-stock deal. The bid was made despite Delta’s repeated statements that it is not interested in the merger deal. The offer to buy Delta emerges from bankruptcy protection by the middle of 2007 that would give Delta''s unsecured creditors $4 billion in cash and 78.5 million shares of US Airways stock. US Airways said the offer is a 25% premium over the current trading price of Delta''s pre-petition unsecured claims as of Tuesday, and a 40% premium over the average trading price for Delta unsecured claims over the last 30 days. US Airways said it would be financially supported by Citigroup Inc. which will provide $7.2 billion in new financing for the deal.

The transaction, if completed, would create one of the world''s largest carriers with about 85,000 employees. The combined company would operate under the Delta name and serve more than 350 destinations across five continents. US Airways said the deal is expected to generate $1.65 billion in annual savings from optimization of the airlines' complementary networks and combining facilities in overlap airports. It also said the deal would reduce unprofitable flying and improve the mix of traffic.


[R]7:30AM Asian markets close mostly higher Wednesday, Japan edges lower.[/R]
Asian markets ended mostly higher on Wednesday. In Japan, the Nikkei 225 Average Index ended 0.3% lower to 16243.47. Shares of camera maker Canon gained 0.5%, while electronics and entertainment company Sony shed 0.6%. In construction and steel stocks, Obayashi declined 1.7% and JFE Holdings lost 0.6%.

The Hang Seng Index ended at a record high, gaining 1.1% to finish at 19093.00. China Construction Bank led the advance, surging 6.4% after BOCI raised its rating on the bank to outperform, announcing it believes that strong earnings growth and high profitability will support higher valuation of CCB. Peers Industrial & Commercial Bank of China gained 3.1% and Bank of China advanced 2.5%. Shares of wireless provider China Mobile rose 1.6%.

The Straits Times Index in Singapore advanced 0.6% to 2777.62. Strength in the property and technology sectors also helped lift shares to a record closing high. An upbeat technology sector helped lift Taiwan''s Weighted Price Index, which gained 0.5% to 7236.85. The Korea Composite Stock Price Index, or Kospi, also rose 0.4% to 1412.54. Shares of Samsung Electronics advanced 2% and LG.Philips LCD added 4.2%. Bank shares were hit hard by the announcement of the government of further moves to control property prices. Kookmin Bank shed 1.8% and Woori Finance closed down 1.4%.

In China, the market finished at a five-year closing high, led by advances from air carriers. The Shanghai Composite Index rose 1.8% to 1922.94, its highest closing level since Aug. 21, 2001, when it closed at 1938.87. The Shenzhen Composite Index added 2.7% to 448.70. Bucking the uptrend were Australia S&P/ASX 200 shedding 0.1% and New Zealand NZX-50 Index ending 0.2% lower. Malaysia KLSE Composite traded flat fell 0.4%, while stock indexes in Thailand traded flat.


[R]6:30AM European markets advanced Wednesday on tech and telecom stocks.[/R]
European markets were higher on Wednesday. By mid morning, the FTSE 100 in London climbed 0.5% to 6,214.9, Frankfurt Xetra Dax was up 0.5% to 6,419.88, and the CAC 40 in Paris added 0.4% to 5,499.94.

Advancers

Infineon of Germany, the semiconductor maker, gained 3.4% after Qimonda, its US-listed memory chip unit, reported better than expected fourth-quarter results.

STMicroelectronics, Franco-Italian chipmaker, gained 1.7%, while ASML, the Dutch maker of chip-manufacturing equipment, climbed 1.4%.

Ericsson, the Swedish mobile phone equipment group, gained 1.5% after it announced a trio of contract wins, including a $110 million deal to expand the mobile network of AIS of Thailand.

Alstom, the French heavy engineer, gained 3.2% after Morgan Stanley raised its price target on the company following its stronger than expected results on Monday.

Decliners

Euronext, the pan-European stock exchange operator, fell 4% after Deutsche Borse said it was withdrawing its bid, a rival offer to that of NYSE. The German operator said it could have only pursued a deal that was supported by both sides and felt this was no longer possible.

Shares in Deutsche Borse and the London Stock Exchange were hit after a group of international banks unveiled plans for a European trading platform. The shares of the German company fell 2%, while LSE shed 4.7%.

Oil and gold

Crude oil for December delivery gained 21 cents to $58.49 a barrel in electronic trading on the NYME. On London ICE Futures exchange, December Brent crude gained 31 cents to $59.15 a barrel ahead of its expiration later Wednesday.

Gold for immediate delivery rose $1.42, or 0.2%, to $622.30 an ounce in early trading in London. The metal dropped 2% the previous three sessions.

The euro bought $1.2825 in morning European trading, compared with $1.2823 in New York late Tuesday. The British pound slipped to $1.8956 from $1.8971. The dollar rose to 117.84 Japanese yen from 117.54 yen.