NWA Rejects Marvin Davis’ $2.6-Billion Bid as Too Low

NWA Inc., parent company of Northwest Airlines, Friday rejected a $2.62-billion takeover offer by oil investor Marvin Davis, saying it was too low.

Davis, who holds about 3% of NWA, said last week he wanted to purchase NWA for $90 a share. He said he wanted to expand the airline and make it stronger.

Davis said his move was prompted in part by an NWA statement that a second outside group, which has not been identified, said it might also launch a takeover bid for NWA. That group holds 4.9% of the company’s stock.

At the time of the offer on March 30, Davis said he was seeking a “friendly transaction,” adding that he considered the price generous.

Keeping Tokyo Property

“Our board has carefully considered Mr. Davis’ proposal as well as numerous other financial and strategic alternatives available to NWA,” Chairman Steve Rothmeier said Friday. “It is clear that Mr. Davis’ proposal does not fully reflect the value of NWA.”

Rumors of a possible takeover of St. Paul-based NWA have circulated in financial markets for the past few months, due in part to its valuable Tokyo real estate holdings.

NWA turned down a $200-million offer for the Tokyo real estate last year, saying it wanted to keep the land for housing employees and development.

Kevin Murphy, airline analyst at Morgan Stanley, said the $90-a-share bid is “not an unfair price.” But Davis’ failure to line up financing may have been troubling, he said.

“Davis didn’t persuade NWA that his offer was serious,” he said. “The next move is to convince the shareholders that it is,” Murphy said, adding: “It’s going to be expensive for Davis to do that.”

Davis said he was disappointed in the rejection and said he would raise the offer if the company’s management could show that NWA was worth more.

“We have a strong, serious interest in owning NWA. In that regard, we are in the process of completing financing arrangements for the acquisition and expect to be in a position to describe them shortly,” Davis said Friday.

Expects Record Results

At the time of the offer, Davis noted that his bid represented a 50% premium over NWA’s stock price over the past few months. Since then, the shares have risen more than $20. The stock closed down 50 cents Friday at $88.75 a share, before the rejection of the bid was announced.