O'Melveny & Wilson Sonsini Acted in Alaska Air's Acquisition of Hawaiian Airlines
Alaska Airlines has tapped legal heavyweights O'Melveny & Myers LLP to navigate its $1.9 billion acquisition of longtime competitor Hawaiian Airlines, while Hawaiian Airlines has brought in Wilson Sonsini Goodrich & Rosati, to guide it through the entire process.
Alaska and Hawaiian announced a merger on December 3, which if successful would consolidate Alaska's place as the fifth-largest US carrier. This comes as repeated acquisitions have crowned four giants – American, Delta, Southwest, and United – the domestic market's kings.
The proposed Alaska-Hawaiian merger may encounter regulatory resistance. The US Department of Justice, concerned about potential fare increases arising from industry consolidation, is actively challenging JetBlue's $3.8 billion acquisition of Spirit and previously thwarted a partnership between JetBlue and American Airlines.
Alaska Airlines has reached an agreement to acquire Hawaiian Airlines for $18 per share in cash, covering roughly $900 million of Hawaiian's debt. This premium offer reflects the recent struggles of Hawaiian Airlines, whose stock plummeted over the past year due to engine recalls and skyrocketing fuel prices, resulting in significant losses after a period of consistent profitability.
Alaska Airlines highlighted the financial attractiveness of its deal with Hawaiian Airlines, acquiring the company at a valuation of 0.7 times its annual revenue, which is approximately one-third the average price observed in recent airline transactions. They further anticipate realising at least $235 million in annual cost reductions as a result of the merger.
The Wilson Sonsini Goodrich & Rosati team advising Hawaiian Airlines on this landmark deal comprises corporate and M&A experts Tony Jeffries, Marty Korman, Doug Schnell, Amanda Urquiza, and Remi Korenblit.
The team comprises various other partners, including Beau Buffier (specialising in antitrust and competition), Christopher Paniewski (focused on technology transactions), Dave Thomas (expert in employee benefits and compensation), Matt Staples (specialising in privacy and cybersecurity), Greg Broome (with expertise in tax matters), Marina Tsatalis (specialising in employment issues), Susan Reinstra (focused on real estate), Kathleen Rothman and Michael Rosati (both specialising in corporate finance), and Joshua Gruenspecht and Josephine Aiello LeBeau (both experts in regulatory affairs).
Alaska Airlines, valued at approximately $5.1 billion, has announced that its acquisition of Hawaiian Airlines will provide a more robust platform for expansion and domestic market competition. The company anticipates the deal to generate significant earnings growth in the high single digits within the first two years, with minimal long-term impact on its financial stability.
The transaction is anticipated to close within the next 12 to 18 months. Ben Minicucci will assume leadership of the merged entity, which will be headquartered in Seattle. Alaska Airlines has confirmed that both airlines will retain their individual brands following the acquisition.
BofA Securities and PJT Partners are functioning as financial advisors to Alaska Airlines in the proposed acquisition while Barclays is serving as financial advisor to Hawaiian Airlines.