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.
When 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?
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]
7 comments on “Alitalia Accepts Air France/KLM Takeover Bid”
Crazy! I can’t believe they would be “apparently so up in arms over possible job cuts.” What’s so bad about losing your job? Silly aircraft maintenance workers…
They will lose their jobs when the company goes out of business. My mom had the unfortunate experience of flying with them once, it was the worse flying experience she has ever had.
Some of the people involved don’t seem to think that’s a bad idea.
“But bankruptcy would not be a catastrophe,” Moratti said.
Besides AirFrance who else is willing to buy these guys ?
Asad – Air One in Italy had expressed interest but the AF/KL bid won out. That can always change if AF/KL falls through.
Bryan – I pick up on your subtle sarcasm, and I won’t argue that it is without merit. But in the economic times we find ourselves, cuts must be made. In medicine, if you are diabetic and find your big toe is necrosing, you gotta cut it off before it spreads to infect other areas. OK, sorry, gross example, but point is some sacrifice has to be made to preserve the whole…now whether the whole is worth preserving (ie. Alitalia) can be up to debate.
Perhaps job loss would be easier to stomach for us Americans if our CEOs and top execs were not making multi-million dollar salaries. I must admit, hearing about a hard-working ramp agent or flight attendant losing their job or taking a pay cut while top execs continue to make more money than they can possibly use is not very palatable.
I’d be shocked if the unions let this go through as currently planned. The job losses and effective shuttering of MXP would be enormous changes for the country to deal with. And since the government has been willing to lose billions by providing workfare jobs in the past, there is little reason for the unions to change their tune now. I’d be shocked if the unions agree to the cuts.
Had to laugh when American Express’ monthly “RewardsWatch” email came in. The first “featured reward” was an offer to exchange American Express points for Alitalia MilleMiglia points so you can … and I quote …
“Visit Italy in comfort and style by transferring points to Alitalia.”
Wonder who would be nutty enough to do that? And I really wonder who at AMEX wasn’t proofing their RewardsWatch emails?