USAir Proposes a 3rd, Higher Bid for Piedmont Aviation

USAir Group made another proposal--its third--late Wednesday to acquire Piedmont Aviation, parent company of Piedmont Airlines.

The new offer was made the day before the Piedmont board of directors is scheduled to meet to consider a takeover proposal from Norfolk Southern, Piedmont’s largest single shareholder. Norfolk Southern already controls 19.4% of Piedmont’s stock and has extensive holdings in the railroad and trucking industries.

Earlier this week, Norfolk Southern and USAir had submitted competing bids, each worth more than $1 billion, for Piedmont, headquartered in Winston-Salem, N.C. Whichever offer Piedmont accepts, it will be the largest airline purchase in U.S. history. At present, the No. 1 deal is Northwest Airlines’ acquisition of Republic Airlines last year for $884 million.

Norfolk Southern’s $65-a-share offer is somewhat less than USAir’s two earlier proposals. But, since it is in cash, it appeared to have the edge, and Piedmont has said that a special committee of four outside directors intend to recommend the Norfolk Southern proposal to the Piedmont board today.

USAir had made two earlier offers: an exchange of USAir stock valued at $71 for each Piedmont share, and a combination of $34 cash and $34 worth of USAir stock. However, USAir on Wednesday sweetened its offer, saying it would make a cash tender offer to purchase 50% of Piedmont’s common stock at $71 per share.

The agreement would also provide that each share of Piedmont common not acquired by USAir Group in the tender offer would be converted in the merger into shares of USAir common stock having an average market price of $73. No less than 1.55 and no more than 1.9 shares of USAir common would be issued in the merger in exchange for each share of Piedmont common.

Piedmont, asked for comment, said only that the board would discuss the new USAir offer today. Norfolk Southern spokesmen declined to comment.

In another pending acquisition, USAir has agreed to buy Pacific Southwest Airlines, which is based in San Diego.