Alaska Air Group (NYSE:ALK) Inc announced late Sunday an agreement to acquire Hawaiian Airlines, sending shares of its parent company, Hawaiian Holdings Inc, more than 180% higher in pre-market trading on Monday.
Alaska Air will pay $18 per share in cash for Hawaiian Airlines, or a total consideration of about $1.9 billion, which includes $0.9 billion of Hawaiian Airlines net debt.
Hawaiian Holdings stock, however, traded well below the $18 per share offer price as regulatory approval for the deal is far from certain, Reuters reported.
In March, the US Justice Department filed a lawsuit to stop JetBlue from buying Spirit Airlines.
In an interview on Sunday, Alaska Air CEO Ben Minicucci was confident of regulatory approval by the end of 2024 because the two airlines overlap in just 12 of the 1,400 flights they collectively operate.
Alaska Airlines noted the agreement should boost earnings within the next two years with at least $235 million of “run-rate synergies.”
Shares of Hawaiian Holdings have fallen more than 50% year to date, as of Friday’s closing price, due to the impact of the Maui wildfires, high fuel costs and jet engine recall issues at some of its Airbus SE planes.
Alaska Air shares, meanwhile, were down nearly 13% in pre-market trading on Monday.
Contact Sean at sean@proactiveinvestors.com