Airline company Hawaiian Holdings (NASDAQ: HA) skyrocketed in pre-market trading after the Alaska Air Group (NYSE: ALK) announced that it was acquiring the company for a transaction value of around $1.9 billion, including Hawaiian Airlines’ net debt of $0.9 billion. Alaska Air will acquire Hawaiian Holdings for $18 per share in cash.
There was a strong buzz that Hawaiian Air was going to be snapped by Alaska Air over the weekend.
Alaska Air expects that the combined company will expand its fleet to 365 “narrow and wide body airplanes enabling guests to reach 138 destinations through our combined networks and more than 1,200 destinations through the Oneworld Alliance.” This acquisition will also result in Honolulu becoming a “key hub for the combined airline with expanded service for residents of Hawai’i to the Continental U.S. and creating new connections to Asia and throughout the Pacific for travelers across the U.S.”
The acquisition is expected to be accretive in the high single digits for Alaska Airlines within the first two years after the close of the acquisition “with at least $235 million of expected run-rate synergies.” The acquisition is expected to close over the next 12 to 18 months.
Is ALK a Good Stock to Buy?
Analysts remain bullish about ALK stock with a Strong Buy consensus rating based on 10 Buys and three Holds. In the past year, ALK stock has slid by more than 10%, and the average ALK price target of $50.09 implies an upside potential of 26.1% at current levels.
