Alaska Air announced plans to buy Virgin America for $4 billion


American airlines Alaska Airlines April 4 announced the decision to buy the ninth volume of passenger traffic airline in the U.S. Virgin America, which is a co-owner of Virgin Group billionaire Richard Branson.

In accordance with the terms of the agreement Alaska Air group Inc is buying shares of Virgin America for $57 per share in cash, the entire airline is valued at $2.6 billion taking into account existing debt Virgin America and lease costs aircraft total cost of the transaction is approximately $4 billion.

The combined company will become the fifth largest carrier in the United States. In a statement, Alaska Air indicated that due to the deal, the carrier will increase its presence in California and will expand the route network to 1,2 thousand daily flights. Income of the combined company, expected in Alaska Air group, will exceed $7 billion.

After the announcement of the deal Virgin America shares jumped 38,82% compared to the previous day’s close of trading, according to NASDAQ.

The deal was approved by the boards of Directors of both companies. For the final merger of the two companies need the approval of the shareholders of Virgin America and regulators, wrote Branson in his blog on the Virgin website.

About what the deal could be announced on Monday, March 3, said a person familiar with the matter, the Reuters source. According to him, the transaction amount will exceed $2 billion In the case of buying Virgin America based in Seattle, Alaska Air will be the fifth largest carrier in the United States.

Major merger in the market of passenger transportation in the U.S. over the past ten years has led to the fact that in America today the top four player control more than 80% of the market, noted The Wall Street Journal.

Virgin America began flying in 2007. Alaska Air group, together with regional partners, operates flights to over a hundred cities in the United States, Canada, Costa Rica and Mexico. The company’s market capitalization is estimated at $10.2 billion