UAL Meets With Davis, Studies Options
Advisers to Los Angeles billionaire Marvin Davis flew to Newark, N.J., late Thursday to meet briefly with representatives of UAL Corp., the parent of United Airlines and the target of a $5.4-billion takeover bid by Davis, it was learned Friday.
At the airport rendezvous, the UAL people were reported to have taken no position on Davis’ $240-a-share bid. They said further that no decision had been made to sell the Chicago-based airline and that the company needed time to review alternatives, such as issuing a special dividend to shareholders or buying back stock.
It was expected that UAL would take two to three weeks to study options for the airline’s future.
The meeting came one day after UAL’s directors reviewed Davis’ offer for the first time at a special meeting in Chicago. Davis made his offer in a letter to UAL’s board Aug. 2.
Among those at the airport meeting were Davis adviser David Batchelder, a former associate of takeover artist T. Boone Pickens, and Michael Goldberg, co-head of the mergers and acquisition department at First Boston Co., the New York investment firm hired by UAL.
Some Discussions
UAL’s shares have risen sharply since Davis’ buyout proposal was disclosed Monday. UAL shares closed Friday at $257, up $5.875 in trading on the New York Stock Exchange, indicating that investors expect a higher offer to emerge.
One likely bidder is Pan Am Corp. The New York-based parent of Pan American World Airways has said it would consider making a buyout proposal if UAL puts itself up for sale.
On Friday, a partner with the New York investment firm that earlier this year backed Pan Am’s unsuccessful bid for NWA Inc., the parent of Northwest Airlines, said it would support a Pan Am bid for UAL “should they firm up their plans.”.
“We’ve had some discussion with them since NWA,” said Lester Pollack, who manages a special corporate buyout fund for Lazard Freres & Co.
Asked if Pan Am is studying a possible offer, he said, “I’m sure they are actively involved in it.”
It was also speculated that the New York corporate buyout firm of Kohlberg Kravis Roberts & Co. might consider a bid for UAL, perhaps in cooperation with the airline’s managers. KKR, which engineered the $25-billion buyout of RJR Nabisco early this year, was outbid for NWA by Los Angeles investor Alfred A. Checchi.
