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Alitalia Accepts Air France/KLM Takeover Bid

You might think that I’d be sad to see Alitalia accept the Air France/KLM takeover bid but you couldn’t be more wrong. The fun is really just beginning.

06_09_10 alitaliaWhen I was in school, I remember the guys from TPG coming in to talk about takeovers. They said there was no company too awful to take over. Even the worst companies could be attractive, as long as the price was right. I’m pretty sure Air France/KLM followed that school of thought when they made their bid for Alitalia.

AF/KL offered 1 share for every 160 outstanding shares of Alitalia. That values each share at about 10 euro cents, an 81% discount over the closing price on Friday and still two and a half times its closing price today. Over the weekend, the Alitalia management team voted to support the bid, so why is it still valued above that level? Because somebody must think this deal may not happen as is.

I wouldn’t be so sure that we’ll see much movement. AF/KL was pretty clear here. That’s what they’ll pay, but they’ll still only do it if the government, unions and EU all back the bid. Everyone who thinks that’s going to happen, raise your right hand. Now, raise your left hand and slap yourself in the face. Getting everyone behind this bid is going to be virtually impossible.

The infrastructure minister of Italy aid, “This is a proposal aimed only at creating profit for the bidder, that is harmful for the company, for the workers and for the country.” Despite those feelings, the government did come out in support of the bid on Monday. But that’s the easy part. Let’s see if they can get the backing of whatever government wins the upcoming elections along with some important local politicians (Milan’s government, for example).

But before that happens, it’s time to convince the unions to play nice. Will it happen? What does this picture of some union members tell you?
08_03_19 azunions
The unions were apparently so up in arms over possible job cuts that the members were even throwing eggs right before the arrival of AF/KL’s chief exec. Like I said, the fun is really just beginning.

[Photo Credit: Dario Pignatelli/Reuters]

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