USAirFLL
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1986 Eastern sale to Texas Air

Tue Jun 18, 2019 2:56 am

As we know in 1986 Frank Borman and the board at Eastern agreed to a sale of the carrier to Texas Air. Now this was another period of consolidation in the industry. Western/Delta, Republic/Northwest, AirCal/American, Ozark/TWA, and PSA/Piedmont into USAir Group. I understand the labor strife at Eastern, however my question is did any other carrier put in a competitive bid or at least kick the tires on a potential deal with Eastern? Despite the challenges that the carrier faced in the early to mid 80’s let’s face it. Eastern was a massive carrier with a lot of valuable assets that someone like American or United may have benefited in a merger with. Heck even Delta could’ve tried to take over its fiercest competitor. Thanks for any feedback
 
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TWA772LR
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Re: 1986 Eastern sale to Texas Air

Tue Jun 18, 2019 4:14 am

I wish EA was integrated in to CO instead of a few assets from EAs corpse. But it probably would've killed CO at the time.
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September11
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Re: 1986 Eastern sale to Texas Air

Tue Jun 18, 2019 4:37 am

I believe, in 1988, Carl Icahn (TWA) attempted to acquire Eastern from Texas Air. It was his decision to pull out.

Before the 1986 sale, many airlines sought pieces of Eastern. Merger was out of question. Sad showdown.

Merger between Eastern and Pan Am would be a good one.
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Phosphorus
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Re: 1986 Eastern sale to Texas Air

Tue Jun 18, 2019 6:30 am

September11 wrote:
...

Merger between Eastern and Pan Am would be a good one.


The book Skygods painstakingly reconstructs the search for merger options at Pan Am. They looked at everybody. Eastern was ruled out simply because Eastern was large, and that would mean somewhat of a "merger of equals". And Pan Am had its head firmly in the clouds regarding its relative position to its peers. They needed somebody with a domestic route network -- yes. But for that somebody to have a say in the future running of the combined airline -- no way.

USAirFLL wrote:
As we know in 1986 Frank Borman and the board at Eastern agreed to a sale of the carrier to Texas Air...


Thank you for starting this thread, and bringing up the question. "Board agreed to a sale..." and almost immediately Texas Air people, at least the way I was reading it, descended upon Eastern and started running the show.
I was pondering -- as we know, Eastern was a public company, with a good chunk of shares in ESOP (Employee Stock Ownership Plan), with banks and funds and private individuals as other shareholders. Weren't they supposed to have options? Isn't there an algorithm to be followed -- buyer launches a tender offer, board recommends (or doesn't), shareholders decide -- to tender in their shares or not? How did the board, in Eastern's case, have this unlimited authority?
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