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Home » Continental Airlines » New Obstacle in United-Continental Merger
Continental AirlinesNewsUnited Airlines

New Obstacle in United-Continental Merger

Matthew Klint Posted onApril 26, 2010 Leave a Comment

With both CAL and UAUA rising (though United is rising more quickly), a new roadblock has arisen in merger talks:

…The two sides disagree over the value of the share prices that would be used to calculate a stock transaction leading to a merger.

The Times, which cited "people involved in the negotiations," said one source "described the disagreement as a potential deal-breaker for the talks, though the companies are continuing to negotiate."

The impasse comes after the two sides worked out many details of a merger, including using the United name for the combined airline as well as making Continental CEO Jeffrey Smisek the chief executive of the merged carrier and United CEO Glenn Tilton its chairman.

Specifically:

According to the Times, while both airlines have agreed to "at-market" prices for the stock transaction, Continental wants to use "unaffected share prices" — those in effect before news of United-US Airways merger talks emerged in early April. United, meanwhile, wants to use a later price.

United’s share price has risen much faster since early April than Continental’s stock price. If Continental gets its way, it would get more United shares than under United’s methodology.

This is a pivotal issue, but if UAUA and CAL continue to grow I am confident they will work out something.

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About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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