Fund Discusses a Possible Northwest Airlines (NWACQ) / Continental Airline (CAL) Merger
In its 13D filing on Northwest Airlines today, 5% Owl Creek Asset Management, which said NWACQ could be worth $19.75-$33.50 per share, said, "US Airways announced that it expects the combination to generate $1,650,000,000 of annual synergies, which is 6.2% of the combined Delta/US Airways passenger sales. Assuming comparable proportional synergies to a Northwest merger with Continental (Continental Airlines is the most logical partner, but this analysis would be equally applicable to another carrier), then the synergies generated by a combination of Continental Airlines with Northwest would be approximately $1,250,000,000annually. Valuing the company at a post-merger multiple of 5.25x EBITDAR including one half of the synergies accruing to Northwest (the other half to the merger partner) results in an implied stock price of $33.50 per share."
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