Davis Offers to Buy UAL, Sell to Unions Later

The UAL Corp. takeover saga took an unexpected twist Thursday as Los Angeles billionaire Marvin Davis proposed to buy the parent of United Airlines and then sell it to its unions in two years.

Davis, in a letter to United’s unions, said he would give them a 20% ownership stake in UAL and a board seat in return for wage concessions. The letter was released by the unions after the close of the market Thursday.

Davis would also give the unions an option to buy his 80% stake in the airline in two years at a price based either on UAL’s cash flow or on Davis’ return on investment.

Davis didn’t say how much he would pay for UAL, but he said that he was willing to contribute $750 million in cash to the transaction. The rest would be borrowed.

Davis offer comes as United’s unions are trying to raise $2 billion in bank financing for a $180-a-share buyout. The unions gave the banks an Oct. 3 deadline. The timing of Davis’ offer suggests that he believes that the union bid might fail.

Gerald Greenwald, the ex-Chrysler vice chairman who was hired by United’s unions to lead the buyout, didn’t rule out a partnership with Davis. In a statement, he said the unions were “optimistic” about their ability to finance their own buyout. “Accordingly, we do not expect any action will be taken on the proposal contained in Mr. Davis’ letter.”

UAL’s board has given the unions until Oct. 9 to come up with a fully financed offer for the company.