Wall St. and their reaction to a US/DL merger

[General Lee]

How did USAir's stock do today? It went up $8.57 or 16% I believe. That sounds like Wall St. approved of a possible buyout. They bought a lot of shares. Why? They probably thought it was a good deal, heck, a great deal. Maybe a steal. That would mean they also thought we were worth more than $8 billion, and it would be a steal if they bought us for that amount. That could help us eventually for our own exit financing, since it shows what Wall ST. thinks we could be worth.(more than $8 billion for sure)


Bye Bye---General Lee

 

[FDJ2]

How did USAir's stock do today? It went up $8.57 or 16% I believe. That sounds like Wall St. approved of a possible buyout. They bought a lot of shares. Why? They probably thought it was a good deal, heck, a great deal. Maybe a steal. Most of the time when mergers are announced, Wall St will sell shares if they believe the price was TOO MUCH. Well, not this time. And they bought A LOT. That means DL, according to Wall St., is undervalued at $8 billion. They thought it was a steal--when in reality we are supposedly worth MORE. That should help us out when we try to get our OWN exit financing. We will attract MORE outside investors, mainly because Wall St. thought we were a steal at $8 billion. That is good for us.

Spank you!

Bye Bye---General Lee

General I agree with what you are say. Obviously LCC underbid, hence the surge in their stock.

All of these hostile takeover attempts need to be taken seriously, but the LCC bid just underscores the tremendous value the Street puts on DAL, even in BK.

This bid also will have a large impact on our claim sale, running the value up to more than we could have imagined just 6 months ago.

I expect more hostile bids to follow, but for now DAL is on track to exit and I believe DAL will have very little difficulty finding exit financing.

I don't believe this bid will fly and time is running short. Parker made a bid just recently and DAL shot it down, now he's gone public with a hostile takeover attempt, hoping to put pressure on the creditors, but at the end of the day his offer is probably not enough as the Street seems to be putting more a value on DAL than Parkers offer.

Why is Parker so desperate to merge with DAL, we can all only speculate, but certainly DAL is not interested. However, if DAL at the end of the day ultimately merges with another carrier, well that's just a part of being in this industry. Mergers, aquisitions and consolidation are not new to this industry.

 

[scoreboard]

Why is Parker so desperate to merge with DAL .

Money. Not to get bigger, but to take out a competitor.

 

[Skyboy722]

How did USAir's stock do today? It went up $8.57 or 16% I believe. That sounds like Wall St. approved of a possible buyout. They bought a lot of shares. Why? They probably thought it was a good deal, heck, a great deal. Maybe a steal. That would mean they also thought we were worth more than $8 billion, and it would be a steal if they bought us for that amount. That could help us eventually for our own exit financing, since it shows what Wall ST. thinks we could be worth.(more than $8 billion for sure)


Bye Bye---General Lee

Clear me up on something here... while I completely understand why a rise in stock price would indicate that Wall Street sees $8B as a great deal, doesn't it also indicate that Wall Street also sees this as something that is likely to actually happen? I mean, why buy an A$$load of LCC stock if you believe this deal's gonna die in an office at the DOJ? Or worse yet, if you believe this would only bring a more attractive offer, one that may be accepted, from another airline other than LCC?

 

[scoreboard]

Follow the Money.

LCC is willing to pay a premium on an investment (Delta) to "own" a competitor. Stock price will go beyond rationale short term PE's for the hope of longterm profit, to be realized when a direct competitor (Delta) is gone.

 

[Skyboy722]

Follow the Money.

LCC is willing to pay a premium on an investment (Delta) to "own" a competitor. Stock price will go beyond rationale short term PE's for the hope of longterm profit, to be realized when a direct competitor (Delta) is gone.

Understood. I was referring to Wall Street's faith in this deal actually happening.

 

[General Lee]

Clear me up on something here... while I completely understand why a rise in stock price would indicate that Wall Street sees $8B as a great deal, doesn't it also indicate that Wall Street also sees this as something that is likely to actually happen? I mean, why buy an A$$load of LCC stock if you believe this deal's gonna die in an office at the DOJ? Or worse yet, if you believe this would only bring a more attractive offer, one that may be accepted, from another airline other than LCC?

If Wall St doesn't like a proposed merger, then they usully sell off stock after it was announced. Maybe the price of the merger is too high, etc. But, if a whole bunch of stock is sold and the stock rises dramatically, then it usally means people think they are getting a great deal and will make money from it. Maybe they think it was cheap. So, $8 billion could be the "low bid." It will probably go higher with possible subsequent bids. That being said, we will now look more attractive to potential exit financiers, primarily because Wall St thought it was a "steal at $8 billion." I don't think there a lot of people on Wall St. "in it for the long run" when it comes to airlines.

Bye Bye--General Lee

 

[Tomct]

I don't think that Congress would allow this to happen anyway. The whole idea of Deregulation is to get rid of the monopoly one would have...if you were to merge these 3 carriers, they would have a HUGE monopoly in the NE. Not good! Like the General said, the only fleet common is the 757 and their engines are RR!

 

[michael707767]

Clear me up on something here... while I completely understand why a rise in stock price would indicate that Wall Street sees $8B as a great deal, doesn't it also indicate that Wall Street also sees this as something that is likely to actually happen?

too early to tell if Wall Street thinks the deal will actually happen. I agree with Gen Lee and FDJ2, the intitial run up on LCC stock means the market thinks its a low price for Delta, and IF it goes through LCC is getting a bargain.

To see if the markets think this deal will actually be consumated, look in the next few weeks to see if LCC holds on to those gains. If LCC stock holds on to yesterdays gains or even gets higher, then its probably going to happen.

My bet, we start to see a decline in LCC stock within a week.

 

[ASApuppy]

Really, $8 billion for Delta is a fire sale price. Think about this, Skywest just bought ASA for around $2.1 billion. $400 million in cash and $1.7 billion in debt assumptions. $8 billion for all of Delta, which would include Comair? If I was a bank, I'd back that too. What a steal. Personally, I see more truth that this is a low-ball offer to get the merger bidding war started. If this does go through, its curtains for Skywest. Wall St confirmed that too as SKYW stock dropped a couple of bucks yesterday. Stratigically, PHX make much more since than SLC for a hub on the west coast.