NWA Inc.'s stock surged today, rising as much as 25% and pulling other airline stocks higher after a $2.6-billion takeover bid from oil investor Marvin Davis.
However, traders and analysts said it was unlikely that Minneapolis-based NWA, the parent company of Northwest Airlines, will favor the bid. The company has previously said it wants to remain independent.
“I think the market is going to look at it with a healthy dose of skepticism,” one analyst said.
At the same time, they do expect the offer, which was made late Thursday, to bring other possible buyers to the surface or force the company into a restructuring.
Janney Montgomery Scott analyst Louis Marckesano was more optimistic than some on Davis’ chance for success. “He has a good chance. It’s possible there’ll be some additional bidding to raise it up to $100 per share without requiring dismantling.”
Other Stocks Follow
Northwest was up $17.375 a share at $85.625 shortly after trading opened today on the New York Stock Exchange, but slipped to $83.25, up $15, midway through the trading day.
Other airline stocks also rose sharply. Pan Am, often rumored as a takeover target, was up 25 cents at $4.625 a share. UAL Corp., parent company of United Airlines, rose $3.125 to $117.625 a share in morning trading.
NWA Chairman Steven Rothmeier said NWA’s board will review the proposal, adding that it “was the first communication from Davis to Northwest Airlines.”
NWA’s attraction, in part, is its Pacific route system. But analysts say they doubt that an industry buyer that might want those routes would join in the bidding because of regulatory hurdles. NWA also owns land in Japan worth about $200 million.
Davis, worth an estimated $1.6 billion, owns Denver-based Davis Oil Co., a large oil and gas concern, as well as a large commercial real estate firm and resort properties such as Colorado’s Aspen, Snowmass and Buttermilk ski sites.
His bid coincides with active interest in another major airline, Texas Air Corp.'s Eastern Airlines unit. Investor Jay Pritzker is an interested buyer, as was outgoing baseball Commissioner Peter Ueberroth. Other bidders, including Donald Trump, are interested in Eastern’s Northeast shuttle service.
Trump had agreed to buy the shuttle last year for $365 million, but when Eastern was virtually shut down by a strike March 4, he said the unit was worth no more than $250 million and Eastern said it would look for other buyers.