Icahn, TWA Reportedly Are Still Talking : But 45.5% Stake Gives Investor Virtual Control
Investor Carl C. Icahn and representatives of Trans World Airlines continued talking late Thursday, Wall Street sources said, although TWA had not publicly responded to Icahn’s offer to buy all of TWA’s stock by a 5 p.m. EDT deadline.
Icahn had reserved the right to withdraw the $24-per-share offer if he had not received a response by the deadline.
Neither side would comment on the substance of their talks or about whether TWA’s directors were ready to accept or deny Icahn’s offer.
But several analysts pointed out that Icahn’s current 45.5% stake in TWA already gives him virtual control of the airline regardless of the directors’ decision.
Worth About $920 Million
The TWA directors earlier accepted a $23-a-share takeover bid from Texas Air Corp., but Icahn on Monday offered $24 a share and said he would vote all of his shares against a Texas Air takeover.
Texas Air officials also were involved in the discussions with TWA.
The Texas Air bid was considered to be worth about $920 million. So far, Texas Air has not countered Icahn’s higher takeover offer, and analysts doubted that a new Texas Air offer could succeed because of Icahn’s large stake in TWA.
Icahn has been aggressively purchasing TWA stock over the past month. He specified that his $24-a-share offer would expire today, after which he could withdraw it.
Meanwhile, analysts discounted a suggestion from a group of Missouri-based TWA employees led by former Gov. Christopher Bond that they were lining up financing to make a competing takeover bid for the airline.
The employee group said that it had financing commitments for more than $1 billion from European lenders and claimed that it was supported by 25% of TWA’s work force of about 7,500 people.
Nonetheless, analysts were skeptical.
“I doubt if it’s (the group’s offer) bona fide. I think it’s a little bit of hope,” Shearson Lehman Bros. analyst Robert Joedicke said.
Many felt that the battle was over and that Icahn was the winner in his bid for TWA.
“He has effective control one way or another,” Joedicke commented. “Technically, if he doesn’t get some word out of the TWA board of directors by five o’clock today, he can withdraw his offer and end up with 51% control (should he buy more stock) and not make an offer,” Joedicke said.
Icahn has agreements with the leadership of two of TWA’s three unions, representing pilots and machinists. Under the agreements, an Icahn-controlled TWA would receive wage and benefit concessions of 26% from the pilots and 15% from the machinists.
Icahn continues to negotiate with the flight attendants union. The membership of the other unions must approve the agreements by Aug. 20.
Joedicke said the lack of details on the Missouri employee group’s plan raises doubts about its ability to make an offer.
Attorney John Kreamer, a law associate of Bond’s, said the group has had discussions with a number of investment bankers in New York but refused to identify them. He said the European lenders include a number of brokerage houses, which would use Swiss bank financing.
