LAN Airlines S.A. (LAN) (NYSE: LFL/IPSA: LAN) and TAM S.A. (TAM) (BM&FBOVESPA: TAMM4/NYSE: TAM) today announced the signing of the binding agreements between both companies and their respective controlling shareholders, in line with the memorandum of understanding (the “MOU”) signed on August 13, 2010. These binding agreements, include an Implementation Agreement and an Exchange Offer Agreement (the “Executed Contracts”) containing the definitive terms and conditions of the proposed business combination of LAN and TAM. This transaction remains subject to approval of Agência Nacional de Aviação Civil of Brazil (“ANAC”) and other relevant government authorities.
The Executed Contracts were approved by the Boards of Directors of both LAN and TAM at meetings held on January 18, 2011 in Chile and Brazil. The Boards of Directors of LAN and TAM approved the binding documents and agreed to recommend to their respective shareholders the approval of the transaction.
Pursuant to the Executed Contracts and through several corporate restructurings to be implemented in Chile and Brazil, and an exchange offer addressed to all holders of TAM stock (other than the Amaro family, the controllers of TAM), the new organizational structure of the combined entity will be as shown in the chart below, assuming all TAM shareholders (other than the Amaro family) tender their shares into the exchange offer:
(Graphic Omitted)Enrique Cueto, CEO of LAN Airlines said: “We are pleased to announce that LAN and TAM are taking a new and very important step towards building one of the leading airline groups in the world. Today’s announcement confirms the commitment that we share with our friends at TAM, which is a strong passion and determination to provide millions of Latin American passengers with better service, always certain of the great potential of the Latin American market.” “As regional leaders, TAM and LAN make a natural move in the global trend of consolidation in the airline sector. We believe this is the best way to guarantee our companies’ growth, in a scenario of high competition and growing demand. We are confident that, after all the required approvals, we will be able to offer even more advantages to our costumers, employees and stockholders”, says Marco Antonio Bologna, TAM S.A.’s CEO.