SkyWest announced this week that it has entered into a definitive merger agreement with ExpressJet Holdings, whereby Atlantic Southeast Airlines, SkyWest's wholly-owned subsidiary, will acquire all of the outstanding shares of common stock of ExpressJet for $6.75 per share in cash, representing a net purchase price of approximately $133 million after giving effect for shares already owned by Atlantic Southeast.
The definitive merger agreement has been unanimously approved by the SkyWest and ExpressJet boards of directors. The transaction is not subject to financing conditions, but is subject to receipt of certain regulatory approvals, approval of ExpressJet stockholders and other customary conditions. The parties currently anticipate that the transaction will close during the fourth quarter of 2010.
Atlantic Southeast has also negotiated the principal terms of a new, long-term, capacity purchase agreement with Continental Airlines, which is intended to become effective upon consummation of the ExpressJet merger. Upon completion of the merger, ExpressJet will become a wholly-owned subsidiary of Atlantic Southeast, with the intention of combining the operations of ExpressJet Airlines and Atlantic Southeast, subject to receipt of necessary regulatory approvals, and utilizing Atlantic Southeast's existing facilities in Atlanta, Georgia as the operating headquarters of the combined company. The parties anticipate that both airlines will continue to operate under separate airline operating certificates until the regulatory process can be completed for combining the airlines under a single operating certificate. Pending receipt of that single operating certificate, Atlantic Southeast intends to transition certain existing ExpressJet support functions to Atlantic Southeast and SkyWest upon consummation of the transaction. Atlantic Southeast and SkyWest believe that ExpressJet employees and passengers will benefit from the merger by building greater efficiencies of scale and capitalizing on growth opportunities.
SA operates 162 CRJs operating for Delta, and ExpressJet has 244 ERJs operating for Continental (206), United (32) and charters (6).
"We are extremely pleased to reach this definitive merger agreement with ExpressJet and look forward to the consummation of the transaction," said Bradford R. Rich, SkyWest, Inc.'s Executive Vice President and Chief Financial Officer. "We also look forward to the integration of these two successful airlines and employee work groups and hope to create integration benefits that will solidify the long-term future of each of these airlines in a very competitive industry," he continued.
SkyWest utilized Raymond James & Associates as investment bankers and the services of Parr Brown Gee and Loveless as its legal advisors.
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