Marvin Davis May Pursue UAL Again
Los Angeles billionaire Marvin Davis would still like to buy the parent of United Airlines and might put together a new offer if the union-led buyout of the airline fails, according to people familiar with the situation.
But Davis will not try to buy Chicago-based UAL Corp. unless the unions change their stance and support him.
Davis has made no specific offer for the airline, but he has kept in touch with UAL’s lawyers and has watched the unions’ efforts closely. Rumors that Davis might use profit from the recent sale of his interest in the Pebble Beach golf resort to buy the airline pushed UAL’s share price up $8 on Sept. 7, when it closed at $100.25. UAL’s shares closed Friday at $100.75, down $1.50.
Even if the union-led offer fails, Davis would have a hard time making a successful bid. The unions are intent on owning the airline and indicate that they are unwilling to work with Davis or any other buyer who wants to control it.
Davis would also encounter some of the same difficulties that the unions face in financing a bid. Banks are increasingly leery of leveraged buyouts, especially in the wake of economic uncertainty that has followed Iraq’s invasion of Kuwait.
Davis triggered the takeover upheaval at UAL 13 months ago with an offer to buy the company for $240 a share. He was outbid by a group led by the airline’s pilots and Chairman Stephen M. Wolf, but its $300-a-share offer collapsed last October, setting off a major slide on stock markets.
The unions, including United’s pilots, mechanics and flight attendants, are now trying to get financing for a $175-a-share offer, but it is not clear whether UAL’s board will accept it. In April, the board accepted a union bid of $201 a share, pending the unions’ obtaining financing, and indicated that it might not favor a lower offer.
The unions lowered their offer after the crisis in the Persian Gulf dashed any hope of financing the $201 bid.
So far, four banks--including Los Angeles-based Security Pacific Bank--have agreed to try to raise $2 billion for the reduced union offer, but they haven’t committed any of their own money yet. The unions met with bankers this week.
