American May Buy Northwest Airlines
Wednesday, July 12th 2000, 12:00 am
By: News On 6
DALLAS (AP) â€” American Airlines parent AMR Corp. has reportedly made a $3.7 billion bid to purchase Northwest Airlines Corp., though the two sides are still far apart.
Sources familiar with the negotiations told the Washington Post and The Dallas Morning News in Wednesday's editions that AMR, parent company of the nation's second-largest airline, has offered $44 per share for Northwest, the nation's number four carrier.
However, Northwest is reportedly looking for in excess of $100 a share, the Post said.
Word of the negotiations surfaced earlier this summer following the proposed acquisition of US Airways, the nation's sixth-largest airline, by UAL Corp., parent company of number one United Airlines.
Analysts have suggested that other carriers had to pursue combinations to remain competitive and that the Eagan, Minn.-based Northwest was American's most logical target.
A source told the Post that American's offer has been on the table for several weeks.
Northwest shares rose $1.063 to $36.813 in early trading Wednesday, less than $2 off its 52-week high. Shares of AMR rose 87.5 cents to $30.313.
American Airlines spokesman Chris Chiames and Northwest spokesman Jon Austin said the airlines would not comment on the reports.
Earlier, AMR officials said they hoped to have a deal in the works by the time the Justice Department began its review of the United-US Airways deal later this year. Under the terms, UAL would pay $4.3 billion and assume responsibility for $7.3 billion in long-term leases held by US Airways.
The reports Wednesday cited indications that American might be prepared to offer a higher price, although nothing close to $100 a share, with sources not saying whether either side has set a deadline for reaching an agreement.
The deal, if successful, would have direct ramifications for other airlines. Delta Airlines, which has been eyeing Northwest's controlling stake in Houston-based Continental Airlines â€” if not an outright purchase of Continental â€” could be a major factor if any deal between American and Northwest materializes in order to help satisfy antitrust regulators.
Meanwhile, Northwest and Continental are already involved in an alliance under which they share frequent-flier miles and even sell seats on each other's flights.
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