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Will Goldman Sachs and British Airways Bid for AMR? Not Likely... It's Just a Rumor
By Ian Cooper
Worse than waiting 8 to 11 hours on an airplane is another airline buyout rumor that’s not likely to come to fruition. It wasn’t so long ago (February 6, 2007) that we said, “We’re also looking for more merger speculation in the airline industry. Sure, US Airways and Delta Air Lines’ deal looks to be off. And sure, Northwest Airlines’ CEO just reiterated the company’s desire to exit bankruptcy as a stand-alone airline. But merger speculation in this industry never seems to die.”
And sure enough, there’s a BusinessWeek-reported rumor that Goldman Sachs and British Airways could propose a bid of between $9.8 billion ($46 a share) and $11.1 billion ($52 a share). There’s only one problem with the rumor, though. British Airways and Goldman Sachs “have no current plans to bid,” according to Reuters. Plus, it’s unlikely because the deal “would face close anti-trust scrutiny and restrictions on foreign ownership,” says Reuters. Under U.S. law, non-U.S. citizens can’t hold more than 49% of a U.S. airline’s total equity, according to reports.
Remember what I’ve said. Always do due diligence when it comes to rumors, which, in today’s marketplace, are a dime a dozen. It’s especially imperative that you do due diligence on rumors that just happen to percolate during options expiration week, like the Alcoa rumor.
Take care,
Ian L. Cooper, Editor, Early Alert Trader