Alaska Air Group To Buy Virgin America For Total Equity Value Of $2.6 Bln

(RTTNews) - Alaska Air Group, Inc. (ALK), parent company of Alaska Airlines, said Monday that it agreed to buy Virgin America Inc. (VA) for $57.00 per share in cash, representing a total equity value of $2.6 billion. Including existing Virgin America indebtedness and capitalized aircraft operating leases, the aggregate transaction value is approximately $4.0 billion.

The merger, which has been approved unanimously by the boards of directors of both companies, is conditioned on receipt of regulatory clearance, approval by Virgin America shareholders and satisfaction of other customary closing conditions. The companies expect to complete the transaction with regulators' approval no later than January 1, 2017.

The combined company expects to achieve $225 million annually in total net synergies at full integration. One-time integration costs are expected to be between $300 million -$350 million. The combined airline is projected to have annual revenues of more than $7 billion.

Alaska Air Group expects the transaction to be accretive to adjusted earnings per share in the first full year, excluding integration costs.

The combined airline will have 1,200 daily departures, with hubs in Seattle, San Francisco, Los Angeles, Anchorage, Alaska, and Portland, Oregon.

The combined organization will be based in Seattle under the leadership of Brad Tilden, chairman and CEO of Alaska Air Group, and his senior leadership team, who collectively have nearly 15 decades of combined airline industry experience.