Alaska Air Group (Alec) will buy Hawaii Holdings (Ha), the parent company of Hawaiian Airlines, for $1.9 billion, including assumed debt, the carrier announced Sunday. ALK stock fell early Monday while HA stock rose significantly.
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Alaska Air will pay $18 in cash per share. That’s a 270% premium from HA stock’s Friday close of 4.86.
HA stock nearly tripled in premarket trading Monday. Hawaiian Holdings shares fell 52.6% in 2023, hitting a 12-year low in October.
ALK stock fell more than 10%. In addition to the Hawaiian Air acquisition, S&P Dow Jones Indices announced Friday night that Alaska Air will exit the S&P 500 Index on December 18, moving into the S&P SmallCap 600 Index.
ALK stock is down 7.5% so far in 2023 as of Dec. 1, despite rising from a Nov. 1 low of 30.75 to a Dec. 1 close of 39.73.
Alaska Air expects $235 million in conservative run rate synergies.
It expects the deal to achieve high profit accretion during the first two years and higher profits thereafter.
The Alaska Air-Hawaiian deal continues the trend of industry consolidation. JetBlue Airways (JBLU) has an agreement to buy ultra-low-cost Spirit Airlines (Memorizes), although the Department of Justice seeks to prevent this takeover.
Please follow Ed Carson on X/Twitter at @IBD_ECarsonTopics in @edcarson1971 And Bluesky V @edcarson.bsky.social For stock market updates and more.
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