'New' United Shares: Analysts Split
The new United will be the world's largest airline. It will retain its Chicago headquarters but its CEO, Jeff Smisek, will come from Continental.
Because the 2008 merger of Delta (DAL) and Northwest proceeded smoothly, expectations are high for the current effort, though Dahlman Rose analyst Helane Becker has a hold on the shares. "We believe 2011 will be a relatively confusing year for the merged company, and as a result there is no hurry to buy these shares," she wrote in a recent report.
On the other hand, Avondale Partners analyst Bob McAdoo hold United with an outperform. He recently wrote that "legacy airlines are producing margins well above anything the industry has seen in recent years."Similarly, Standard & Poor's analyst Jim Corridore has a strong buy on Continental shares. He said that the merger creates "an extremely strong global route network with opportunities for cost and revenue synergies," and also that "having one fewer competitor will help the entire industry." In Houston, the merger was favored by more than 98% of the votes cast, as 75% of the outstanding shares were voted in favor. "We are grateful for our stockholders' strong vote of confidence in this merger," said Continental CEO Jeff Smisek in a prepared statement. United shareholders also backed the deal by more than 98%. The merger is expected to close by Oct. 1. Until it closes, United and Continental stock will both continue to trade. Then Continental shareholders will get 1.05 shares in the new company for each of their existing shares. -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here:
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