UAL Stock Soars on News of New Buyout Offer From Board
UAL Corp. stock rose sharply this morning after a union official said the parent of United Airlines will present a new proposal for a buyout of the airline company to its flight attendants union on Wednesday.
“The company has said that it has a presentation to make to the unions about a new buyout. . . . They are going to make that presentation on Wednesday, Dec. 6,” said Pat Friend, outgoing president of UAL’s flight attendants union.
“We have no idea what it is,” Friend added.
UAL’s management has been struggling to put together a new buyout for the Chicago-based airline company since a planned $6.75-billion management and pilots buyout collapsed in October when the group failed to secure bank financing.
Management is under pressure to shape a new buyout because Coniston Partners, a New York investment firm, has said it plans to take control of the board and push through a new transaction to lift the company’s stock price.
Expectations that a revised bid will be forthcoming sent UAL stock sharply higher this morning. It surged $5 to $179 a share by noon on the New York Stock Exchange, adding to Friday’s jump of $12.50.
Condor Partners LP, a holding company controlled by Coniston, said in filings with the Securities and Exchange Commission that it raised its holdings in UAL to 11.8% from 9.7%.
Wall Street traders said they are encouraged by the news that Coniston had purchased more shares.
“Coniston’s buying more stock is great,” one Wall Street trader said today. “They’re putting their money where their mouth is.”
Flight attendants leader Friend also said her union is scheduled to resume labor negotiations with UAL on Wednesday. The union has been working without a contract since Nov. 1, 1987.
A spokesman for UAL’s pilots union said he was not aware of any meetings scheduled between the pilots union and the company. UAL’s machinists were not immediately available for comment.
Coniston last month said it plans to oust UAL’s board through a consent solicitation, a direct appeal to stockholders that needs a majority vote in favor to be carried, and to pursue moves to raise UAL’s stock price.
Friend said that while a revised buyout plan may be presented at Wednesday’s meeting, “We’re a long way away from an agreement that would require a vote.”
Louis Marckesano, of the Philadelphia brokerage Janney Montgomery Scott Inc., said the “odds are pretty good” that UAL is working quickly to wrap up a new deal with employees.
The resignations this weekend of two officers of the flight attendants union--Friend and Vice President Carol Holmes--could also mean a deal is near, Marckesano said.
“The flight attendants have not been as cooperative under (Friend and Holmes),” Marckesano said in a telephone interview. “This may be a sign that perhaps they are easing their stance.”
