The acquisition deal to buy Virgin America has heated up as Alaska Air Group Inc. outbid JetBlue Airways. According to the latest updates, Alaska Air is close to acquire Virgin America after offering to buy Richard Branson's airline company for over $2 billion in cash.
Alaska Air faced off against JetBlue Airways during the final round of bidding and it was reportedly hailed as victor since it held an investment-grade credit rating and it has more cash on its books than other Virgin America suitors. According to Wall Street Journal, Alaska Air won the bidding with a cash offer of about $2.5 billion.
With the aforementioned offer, Alaska Air is set to pay between $56 and $58 per share to acquire Virgin America. But according to the people familiar with the deal, the agreement had not yet been finalized, as per Reuters.
Aside from offering more cash during the final bidding, Alaska Air also stressed that it would need to doff fewer airport slots compared to JetBlue Airways. The reason? Alaska Air's network has fewer overlaps with Virgin America, New York Times reported.
Despite the fact that the negotiations were advanced, the deal still has the possibility to fall apart and a last-minute bid from JetBlue Airways may be possible, Bloomberg noted. A deal could be announced as early as Monday.
Virgin America, Alaska Air and JetBlue Airways compete in a tier below the giants that are American, Delta and United. When Virgin was placed for sale this year, it attracted preliminary interest from several potential suitors.
The biggest domestic airlines, however, gave way to smaller competitors that were eager to expand their networks since the larger companies were constrained by antitrust regulations. But the Virgin America acquisition would be the latest addition to the major takeover in an industry that has drastically withered over the past ten years with majority of the controlling power belongs in the hands of the major airlines.
Meanwhile, the latest update on the Alaska Air-Virgin America deal revealed that the eighth biggest U.S.-based airline in terms of traffic has agreed to buy Branson's company for $2.6 billion. Based on a CNN Money report, Alaska Air will reportedly pay $57 per share and the transaction is worth almost $4 billion, which include debt and aircraft leases.