In a deal that will create the world’s largest airline, United Airlines parent UAL Corp has announced it will buy Continental Airlines Inc. for US$3.2-billion in an all-stock deal. The merged company will boast over US$29-billion in annual revenue.
Carrying the United Airlines brand, the airline will be based in Chicago. Continental’s Jeff Smisek will be in charge while UAL CEO Glenn Tilton will act as non-executive chairman.
Continental shareholders will receive 1.05 shares of United common stock for each Continental common share they own. Based on United’s stock price of US$21.83 on Friday afternoon, and Continental’s 139.6 million outstanding shares as of April 21, United would pay US$3.2-billion for Continental.
If the deal receives government approval, the airlines say it would generate US$1-US$1.2 billion in revenue and cost benefits for the combined company by 2013. The companies hope to complete the transaction in the fourth quarter of 2010.
Air Canada is a partner of both airlines through the Star Alliance.