Voice Of Reason
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"Next M&A Hotbed?
Published: Thursday, 9 Sep 2010 | 6:28 PM ET Text Size
By: Drew Sandholm Web Producer
The M&A trend has hit agriculture, technology and pharmaceuticals, so what's the next sector to get caught in the "urge to merge?"
If you ask Jamie Baker of JPMorgan, airlines are primed for consolidation.
"With the potential planned closure of United and Continental [CAL 21.95 -0.19 (-0.86%) ], there's no reason to think that the wheels of consolidation are going to stop turning at that point," said Baker.
With America West/US Airways in 2005 and Delta/Northwest in 2008, it seems that every two to three years there is another merger in the airline industry. That said, Baker wonders what will happen to names like AirTran [AAI 4.24 -0.07 (-1.62%) ], Alaska Air [ALK 46.26 -0.07 (-0.15%) ] and US Air [CAL 21.95 -0.19 (-0.86%) ]. He thinks they'll eventually be rolled into the 'Big Three' and would include: American [AMR 6.10 0.05 (+0.83%) ], Delta [DAL 10.54 -0.09 (-0.85%) ] and United [UAL 131.0 -0.60 (-0.46%) ].
Going forward, he thinks such consolidation would help the airline industry. He said it would allow for future capital to be allocated more efficiently, allowing airlines to cleanup their balance sheets and avoid future bankruptcies.
Baker recommends buying American, Delta and US Airways and expects the next takeover to occur in 2013 or 2014.
Watch the video to see the full interview with Baker."
http://www.cnbc.com/id/39085385
http://en.wikipedia.org/wiki/All_your_base_are_belong_to_us
Published: Thursday, 9 Sep 2010 | 6:28 PM ET Text Size
By: Drew Sandholm Web Producer
The M&A trend has hit agriculture, technology and pharmaceuticals, so what's the next sector to get caught in the "urge to merge?"
If you ask Jamie Baker of JPMorgan, airlines are primed for consolidation.
"With the potential planned closure of United and Continental [CAL 21.95 -0.19 (-0.86%) ], there's no reason to think that the wheels of consolidation are going to stop turning at that point," said Baker.
With America West/US Airways in 2005 and Delta/Northwest in 2008, it seems that every two to three years there is another merger in the airline industry. That said, Baker wonders what will happen to names like AirTran [AAI 4.24 -0.07 (-1.62%) ], Alaska Air [ALK 46.26 -0.07 (-0.15%) ] and US Air [CAL 21.95 -0.19 (-0.86%) ]. He thinks they'll eventually be rolled into the 'Big Three' and would include: American [AMR 6.10 0.05 (+0.83%) ], Delta [DAL 10.54 -0.09 (-0.85%) ] and United [UAL 131.0 -0.60 (-0.46%) ].
Going forward, he thinks such consolidation would help the airline industry. He said it would allow for future capital to be allocated more efficiently, allowing airlines to cleanup their balance sheets and avoid future bankruptcies.
Baker recommends buying American, Delta and US Airways and expects the next takeover to occur in 2013 or 2014.
Watch the video to see the full interview with Baker."
http://www.cnbc.com/id/39085385
http://en.wikipedia.org/wiki/All_your_base_are_belong_to_us
