AirTran to be Acquired by Southwest

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Southwest Airlines announced Monday that they will be acquiring all of outstanding common stock of AirTran Holding Inc. The purpose behind the acquisition is both cash and Southwest common stock.

AirTran is the parent company of AirTran Airways. On Friday, at the closing stock price of $12.28 of Southwest, the values of AirTran common stock remains at $7.69 per share, which is approximately $1.4 billion. This is equivalent to a premium of 69 percent over the Friday close of AirTran stock.

Under the agreement, AirTran common stock will be exchanged for $3.75 in cash for each share. While 0.321 shares of Southwest Airlines’ common stocks are subjected to certain adjustments, based on Southwest Airlines’ share price prior to closing.

Altogether the transaction value is $3.4 billion considering AirTran debt and jet leases.