Alaska Air, Virgin America Received DOJ Request for More Information
May 16 2016 - 6:40PM
Dow Jones News
Alaska Air Group Inc., which in early April announced a $2.6
billion offer to acquire Virgin America Inc., said it and its
target have received a request for more information on the proposed
transaction from the U.S. Justice Department.
The two carriers said the so-called "second request," is a
"standard part" of antitrust regulators' review process and said
they are cooperating fully with the Justice Department. The request
for more information extends the period that the parties must wait
to close the transaction, until 30 days after they have complied
with the request or if the waiting period is otherwise terminated
by the government.
Alaska Air Group, parent of Alaska Airlines, and Virgin America
said they would respond "promptly" and are "confident" they will
obtain regulatory approval to complete their transaction no later
than Jan. 1, 2017.
Eleven days after they announced the planned deal, the two
submitted paperwork outlining the transaction to the government, as
required by the Hart-Scott-Rodino Antitrust Improvement Act. This
gives the Justice Department time to review the proposed
transaction ahead of time and determine whether it is
anticompetitive.
The waiting period normally is 30 days before the parties can
close the deal, which would have been in the middle of May. But by
asking for a second request, the Justice Department extends the
review period. If it believes after the additional information is
provided that the transaction may violate antitrust laws, it can
seek an injunction in federal court to prohibit consummation of the
deal. Or it could drop its suit if the parties agreed to make
sufficient concessions to preserve completion.
If Alaska succeeds, it would become the fifth-largest U.S.
airline, vaulting ahead of JetBlue Airways Corp., which also
participating in the bidding for Virgin America. But the enlarged
Alaska would be a very small No. 5, as the nation's four largest
carriers, all bolstered in size through mergers in recent years,
control more than 80% of domestic capacity.
Directors of Alaska Air Group and Virgin America already have
approved the combination, which now requires a vote by Virgin
America shareholders.
Write to Susan Carey at susan.carey@wsj.com
(END) Dow Jones Newswires
May 16, 2016 19:25 ET (23:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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