Report of New Takeover Plan Lifts UAL Stock

Shares of UAL Corp. closed higher Tuesday following a published report that United Airlines management has crafted a tentative, employee-led leveraged buyout bid valued at up to $240 a share, or about $5.4 billion.

UAL rose $2.75 to finish at $176.25 a share on the New York Stock Exchange. A UAL spokeswoman declined to comment on the report or the stock move.

However, takeover stock traders said they doubted whether any proposal for the Chicago-based airline company will be completed in time for consideration during a board meeting today.

Traders said UAL rose on a report in the Chicago Tribune that cited unidentified sources as saying United’s management has come up with a buyout proposal worth up to $240 a share.

UAL’s management has been struggling to craft a new buyout for the airline’s parent since a planned bid of $300 a share, or $6.75 billion, led by UAL management and pilots fell apart in October after the group failed to secure financing.

The Chicago-based company is under pressure to shape a new bid because Coniston Partners, a New York investment firm, has threatened to take control of UAL’s board and push through a restructuring or other deal to boost its stock price.

The newspaper said there is speculation that the new buyout proposal might entail an offer in which each UAL share would be exchanged for up to $200 in cash and securities with a face value of about $40 a share.

Under the plan, UAL employees would own about two-thirds of the company and public shareholders about one-third after a buyout, the newspaper said.

It also said that under the plan, management would invest $30 million for a 2% stake in the airline company and would be granted options for another 6%.

The chief difficulties in wrapping up a deal reportedly have been enlisting the support of United’s machinists and flight attendants unions and persuading banks to finance a transaction.