An interesting little merger attempt popped up on Friday that, as Holly Hegeman says, looks like a squeeze play. SkyWest has announced that it wants to buy ExpressJet for $3.50 a share.
The airline was hovering just over the $2 a share mark before the announcement, so this is a nice little premium. ExpressJet, however, thinks it’s worth more than that and has turned the offer down. It got more interesting on Friday afternoon when it came out that Continental is also behind this thing.
Continental hasn’t been happy with the relatively hight costs of the ExpressJet contract, and it has apparently told ExpressJet that it will remove 51 of the aircraft under contract beginning in December 2009. At the same time, it went and cut a deal with SkyWest on a broad new deal that will only go into effect if the takeover occurs. So, SkyWest buys ExpressJet and offers to fly for Continental for less. Continental tells ExpressJet that they either do it or they’re going to start walking. Wow, it sucks to be ExpressJet.
I have to think that if SkyWest wins, the ExpressJet standalone operation will probably be toast. That’s really too bad, since I’ve always thought it was a good idea. But with oil where it is right now, those 50 seat jets (and really, any plane in general) don’t look very good anywhere. And SkyWest probably will want to remain focused on the feeder operation, I’d think.
But why does SkyWest want a bunch more 50 seaters? No matter what the reason, I’m sure the ExpressJet guys are feeling very, very somber right now.
SkyWest and Continental Put the Screws to ExpressJet