Southwest airlines leveraged buyout issue

[Bob_Sacamano]

Why pick? Go for the Triple Crown.

Heh heh...

All this merger/acquisition/LBO stuff has me so worked up, I can't decide if I want an Old Milwaukee, a cheap Virginia Ave prostitute, or a labotomy...

 

[Lear70]

LMAO!!

Nice one, Bob. :beer:

 

[Cobraair75drvr]

Sorry to be such a Debbie Downer. Just trying to pass on what some of us at nwa have seen happen over the last 20yrs. Going from a cash rich posistion to what we are today. The last few years have drained alot of the optomism As a vocal minority no voter:angryfire , I have thought we should maybe change our nickname from Cobraairlines to something a little more tame such as Gardensnakeair

Hey man. Thanks for the pep talk....... I think. LOL. Let's that little sliver of doubt come raging in.

BTW. Love the Cobra nickname (and your "handle") you guys have. Although after this last round I might have to come up with something slightly less antagonistic.

Gup

 

[SWA GUY]

Main Entry:

Leveraged Buyout:
nDefinition: the purchase of a controlling interest in a company by its management but using outside capital




Hostile Takeover:
nDefinition: An acquisition of a firm despite resistance by the target firm's management and board of directors.


It would help if ya'll could use the right terminology....

 

[mule]

Main Entry:

Leveraged Buyout:
nDefinition: the purchase of a controlling interest in a company by its management but using outside capital




Hostile Takeover:
nDefinition: An acquisition of a firm despite resistance by the target firm's management and board of directors.


It would help if ya'll could use the right terminology....

Better definitions here:

http://en.wikipedia.org/wiki/Leveraged_buyout

http://en.wikipedia.org/wiki/Takeover

 

[YourPilotFriend]

In an LBO situation, SW would be disassembled and sold off. Since it has no debt and a poor earnings vs revenue stream(it's an airline), the assets are more valuable than the company itself. Management is valuing the company at $20+ billion, but the major wall street players say $7-10 billion based on performance. It won;t be hard to get a loan for $7 billion when you have at least $14 billion in assets and growing.

 

[SWA GUY]

SWA is worth more as a whole than in parts. That's the very simple reason there'll be no Hostile Takeover. And that, my friends, is why Gary Kelly is NOT worried about a takeover bid.

 

[FlyBarneyJets]

What effect would a reverse stock split have on share price and market cap? I've never experienced one. Is it even possible? If it is, would that help decrease the attraction corporate raiders might have to SWA?

The rumor I keep hearing is that there will be a significant increase in debt...one way or another.

 

[SWA GUY]

What effect would a reverse stock split have on share price and market cap? I've never experienced one. Is it even possible? If it is, would that help decrease the attraction corporate raiders might have to SWA?

The rumor I keep hearing is that there will be a significant increase in debt...one way or another.

There are no corporate raiders interested in SWA.

 

[CF34-3B1]

We're building an oil refinery optimized to produce Jet A.

Canyon Blue Petroleum, Inc.

Hedges are so last year.

 

[igneousy2]

What effect would a reverse stock split have on share price and market cap? I've never experienced one. Is it even possible? If it is, would that help decrease the attraction corporate raiders might have to SWA?

The rumor I keep hearing is that there will be a significant increase in debt...one way or another.

In theory, A reverse stock split has the same effect as a regular stock split...nothing. The important number isn't share price it's market cap and in any kind of stock split the market cap does not change.

Sometimes companies reverse split stocks to avoid de-listing from an exchange.

Lots of private investors are wary of "cheap stocks", most hobbiest think that a $5 stock is cheap and a $300 stock is expensive.

Also, in financial reports it sounds better on the news when your company earned $4 per share vs. $1 per share.

Stock price has nothing to do with the possibility of a hostile takeover, $5 billion worth of stock is $5 billion worth of stock no matter how you divide up the pie.

Later

 

[ivauir]

In an LBO situation, SW would be disassembled and sold off. Since it has no debt and a poor earnings vs revenue stream(it's an airline), the assets are more valuable than the company itself. Management is valuing the company at $20+ billion, but the major wall street players say $7-10 billion based on performance. It won;t be hard to get a loan for $7 billion when you have at least $14 billion in assets and growing.

A great idea! What assets does LUV own? Oh Yeah - airplanes! Who had money to buy 500 737s? SWA! Its a great idea, do a hostile take over of LUV. Strip the company of all of its cash and then sell the assets to Southwest Airlines because they have a lot of cash and want to buy more 737s ....

I think I'm begninning to see why GK isn't worried about this.