Hedge Fund Pushes Delta, United Merger

Nov 15 2007 | 7:48am ET

Delta Air Lines and United Airlines are a step closer to creating the world’s largest air courier, and hedge fund Pardus Capital Management couldn’t be happier.

The $3 billion New York fund manager sent a letter to both airlines urging them to commence merger talks. And although both denied that talks have begun, Delta CEO Richard Anderson said his company has set up a special committee to explore its options, though he said Pardus’ claim that Delta must merge or die is “inaccurate and ill-founded.”

Pardus, which owns 7 million Delta shares and 5.6 million shares of United parent UAL Corp., said it also considered a Delta merger with Continental Airlines and Northwest Airlines. According to the Pardus letter, a Northwest merger would create the greatest net synergies of $1.5 billion, but could result “in the need for a potential follow-on transaction at a later date.” A Continental deal would produce no synergies.

The hedge fund said a merged Delta and United would result in $585 million in synergies and “more network breadth than any other transaction.”

“We believe it is imperative that you seek to enter into a merger transaction with another carrier given the rapid rise in fuel prices and the increased risk to the business as a stand-alone entity,” Pardus President Karim Samii and principal Shane Larson wrote.


In Depth

Star Fund Managers Battered By Rocky Ride In Yields, Currencies

May 28 2015 | 6:05am ET

Some of the biggest names in the investment world have been whipsawed by the recent...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

The Road To Tax Alpha

May 28 2015 | 5:36am ET

Tax-related alerts are increasingly helping investment managers harvest tax alpha...

 

Sponsored Content

Editor's Note