TWA Canceling Merger Deal With Texas Air

Trans World Airlines, now more than 50% owned by financier Carl C. Icahn, is working on dissolving an earlier merger agreement with Texas Air, a spokeswoman said Monday.

Icahn, who had support from airline unions and is offering $24 a share for the TWA stock that he does not yet own, disclosed Friday that he had raised his stake in the company to a controlling 50.3% and said that he hoped to complete an agreement soon with TWA’s directors to support his bid.

But first, TWA and Texas Air must end an earlier pact, under which Texas Air had agreed to buy the airline for $26 a share.

The agreement would have had to pass a stockholder vote.

“The company is working toward dissolving the agreement the company has with Texas Air,” said Lori Feinberg, a TWA spokeswoman. She said she did not know what, if any, progress had been made.

Texas Air’s Stake

Bruce Hicks, a spokesman at Texas Air’s offices in Houston, said he did not know the current status of the talks.

Texas Air will not be a complete loser in its bid for TWA, however.

It owns 2.2 million shares of the company’s stock, which was purchased for about $20 a share, and has an option to buy an additional 6.4 million shares for $19.625 a share.

That stock would be sold back to Icahn at $24 a share.

In addition, the merger agreement provided for TWA to pay Texas Air an $18-million fee if the pact was broken.

TWA closed Monday at $22.375 a share, unchanged from Friday, in New York Stock Exchange composite trading.

Texas Air, listed on the American Stock Exchange, closed at $18.25 a share, up 50 cents.