Alaska Air Group (ALK) is set to acquire Hawaiian Holdings (HA), the parent company of Hawaiian Airlines, for a total of $1.9 billion, which includes assumed debt. This major announcement came from the two carriers on Sunday.
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Under the agreement, Alaska Air will pay $18 per share in cash, marking a significant 270% premium from HA stock’s closing price of 4.86 on Friday.
Hawaiian Holdings’ stock has experienced a notable decline of 52.6% in 2023, reaching a 12-year low in October.
In contrast, ALK stock has dropped 7.5% year-to-date; however, there has been a surge from the Nov. 1 low of 30.75 to a Dec. 1 close of 39.73.
Alaska Air is anticipating $235 million in conservative run-rate synergies from this deal and expects the transaction to result in high-single-digit earnings accretion within the first two years, followed by high teens thereafter.
The Alaska Air-Hawaiian deal is part of an ongoing industry consolidation trend. Another example is the agreement for JetBlue Airways (JBLU) to acquire ultra-low-cost Spirit Airlines (SAVE), despite the Justice Department seeking to block that acquisition.
Furthermore, S&P Dow Jones Indices announced that Alaska Air will exit the S&P 500 index on Dec. 18, transitioning to the S&P SmallCap 600. This resulted in a modest decline in ALK stock on Friday.
Stay updated on stock market news and more by following Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971, and Bluesky at @edcarson.bsky.social.
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