Mdsmith11 From United States of America, joined Jul 1999, 194 posts, RR: 1 Reply 2, posted (10 years 2 months 2 days 14 hours ago) and read 1824 times:
PHOENIX, Oct 6, 2003 (BUSINESS WIRE) --
Mesa Air Group, Inc. (Nasdaq: MESA) today announced that it has made a proposal to the board of directors of Atlantic Coast Airlines Holdings, Inc. (Nasdaq: ACAI) to combine the two companies. The combination would create the leading operator in the regional airline industry, with nearly 300 aircraft and broad reach across major US markets.
The attached letter, expressing interest in a combination of the companies, has been sent from Mesa Chairman and Chief Executive Officer Jonathan Ornstein, to ACA's Chairman and Chief Executive, Kerry Skeen.
Under the terms of the all-stock offer, Mesa has offered 0.9 of a Mesa share for each share of ACA. Based on Mesa's stock price on October 3, 2003, the offer is valued at $11.30 per ACA share. That represents a 25% premium over its closing stock price Friday and a 35% premium over ACA's average trading price since July 28, 2003.
Mr. Ornstein commented: "ACA is a great company with an excellent operational track record, committed hard working employees and a proven history of financially successful code share partnerships. While the company has indicated that it intends to end its relationship with United Airlines and shift strategy, we continue to believe that a business model based on revenue guarantee code share relationships with major airlines serving hub networks offers the greatest long-term prospects for shareholders, customers and employees. By bringing these two companies together, and maintaining the successful revenue guarantee code share business model, we have the opportunity to create the leading regional airline in the United States."
Mesa Air Group will host a conference call on Tuesday, October 7th, at 11:00AM EST to discuss today's announcement. To participate in the call, analysts and investors may dial into the call at 800-575-5790, and international callers may dial into 719-457-0349. The passcode for both lines is 709373. A presentation to accompany Tuesday's conference call may be found at www.mesa-air.com prior to the call.
Mesa currently operates 149 aircraft with 938 daily system departures to 163 cities, 40 states, the District of Columbia, Canada, Mexico and the Bahamas. It operates in the West and Midwest as America West Express; the Midwest and East as US Airways Express; in Denver as Frontier JetExpress and United Express; in Kansas City with Midwest Express and in New Mexico and Texas as Mesa Airlines. The Company, which was founded in New Mexico in 1982, has approximately 4,000 employees. Mesa is a member of the Regional Airline Association and Regional Aviation Partners.
This press release contains various forward-looking statements that are based on management's beliefs, as well as assumptions made by and information currently available to management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable; it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, projected or expected. The company does not intend to update these forward-looking statements prior to its next required filing with the Securities and Exchange Commission.
October 6, 2003
Mr. Kerry B. Skeen
Chairman and Chief Executive Officer
Atlantic Coast Airlines Holdings, Inc.
45200 Business Court
Dulles, Virginia, 20166
I tried to reach you this morning to tell you first hand about our
intentions. Mesa Air Group, Inc. ("Mesa") believes that a combination
with Atlantic Coast Airlines Holdings, Inc. ("ACA" or the "Company")
is compelling and in the best interests of both companies, our
respective shareholders, employees and customers. While we have
reviewed only publicly available data to this point, we are prepared
to move forward promptly with a business combination between the two
Accordingly, Mesa is seeking to enter into an agreement with ACA to
acquire all the outstanding stock of ACA in a tax-free transaction
whereby Mesa would issue 0.9 of a share of its common stock for each
ACA share. Based on our closing share price of $12.55 and based on
ACA's closing share price of $9.02 on October 3, 2003, our offer
represents a premium to your shareholders of 25% over the current
value of their shares. This price also represents a premium of 35%
over the average closing price of ACA since late July, and we believe
shares in the combined company will provide exceptional future value
to the ACA shareholders.
There are clear strategic benefits. A combination would form the basis
to leverage each company's assets, franchise, partners and management
expertise to better position the combined company in today's
competitive marketplace. It is clear that such a transaction would
enable us to service the needs of our airline partners more
efficiently and profitably. If we can realize only a small portion of
the potential strategic benefits, we believe our combined earnings
could improve by over 25%. Furthermore, our focus will remain in the
business of providing cost effective regional feed for our airline
Our proposal will be subject to only customary conditions, including
among others, obtaining necessary regulatory approvals, the redemption
of the ACA Right's Plan in accordance with its terms, the completion
of satisfactory due diligence, negotiation of definitive agreements
and necessary shareholder approvals.
Although we are offering a full and fair price to ACA shareholders, we
may have flexibility on deal terms and structure if you are willing to
work with us towards consummating a transaction. In connection with
our proposal, we have retained Cadwalader, Wickersham & Taft LLP as
counsel and Merrill Lynch & Co. as financial advisor.
In light of the compelling benefits to our respective shareholders and
the materiality of this proposal, we are publicly releasing the text
of this letter. Our strong preference would be to work with you to
reach a mutually acceptable transaction. I would be happy to meet with
you or to meet with your Board at its convenience to discuss in
greater detail our thoughts with respect to a possible business
combination and the future role that you and your management team
would have in the combined entity. I look forward to hearing from you
or one of your representatives as soon as possible.
Jonathan G. Ornstein
Chairman of the Board & Chief Executive Officer
cc: Board of Directors, ACA
SOURCE: Mesa Air Group, Inc.
Mesa Air Group
Jonathan Ornstein / Peter Murnane, 602-685-4000
Steve Lipin / Tim Payne, 212-333-3810
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