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selecta · Member Joined: 24 Dec 2006 Posts: 813 Location: ORD

The Arizona Republic
Jan. 28, 2007 11:12 PM
source

The Wall Street Journal reported early Monday that US Airways Group Inc. is willing to increase its hostile takeover offer for Delta Air Lines Inc. by $1 billion under certain conditions as part of a last-ditch effort to win support from Delta creditors, according to people familiar with the matter.

The Tempe-based carrier said over the weekend that it would sweeten its $9.8 billion cash-and-stock bid to about $10.8 billion if the official committee of creditors approaches Delta with a demand that the Atlanta airline open itself to due diligence by US Airways, these people said. To get the additional $1 billion, the committee also would have to ask a bankruptcy judge to postpone a hearing next week on Delta's restructuring plan, these people said. The group also would have to agree to support the start of a formal antitrust review, according to the Journal article to be published on Monday.

The move by US Airways is aimed at salvaging an acquisition attempt that so far has failed to win broad support from the official committee of Delta creditors, which holds much of the power to decide the airline's fate. The offer from US Airways is set to expire Thursday, and Delta could begin soliciting votes from creditors for its stand-alone reorganization plan following the Feb. 7 court hearing. Gerald Grinstein, Delta's chief executive, has insisted that the airline would be best to emerge from bankruptcy-court protection on its own later this year, according to the Journal.

US Airways indicated that the $10.8 billion bid was final, said one person familiar with the matter. This person said the airline didn't consider the increased bid official since it hadn't yet sought director approval.

The Journal reported that a spokeswoman for US Airways confirmed that the airline's advisers have been in contact with advisers for the ad hoc committee of Delta creditors, but she declined to comment on any specifics. A Delta spokesman declined to comment.

It isn't known whether the additional $1 billion is swaying any of the Delta creditors on the official committee closer to supporting the US Airways takeover bid. Any sign that the committee is wavering in its endorsement of Delta's strategy to exit from bankruptcy protection on its own this spring would likely have to emerge in the next several days.

The Journal article said the sweetened offer came after US Airways was approached late Friday by a group of Delta creditors that aren't part of the official committee, said the people familiar with the matter. The outside group, consisting largely of short-term investors who are more interested in the US Airways takeover than the official committee, proposed that the bid be increased by more than $2 billion, these people said. The ad hoc group also indicated that some of its members would be willing to publicly state their support for the acquisition, according to the Journal.

On Saturday, US Airways responded with its offer of an additional $1 billion in cash, bringing the total cash portion of the bid to about $6 billion, these people said. US Airways wouldn't increase the number of shares from the previous offer of 89.5 million, but it included a termination fee that would be paid to Delta creditors if the deal is blocked by the Justice Department for anticompetitive reasons.
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