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Interest To Acquire About A 10% Stake In American Airlines Expressed By Qatar Airways

Interest To Acquire About A 10% Stake In American Airlines Expressed By Qatar Airways
In a move that not many people could have predicted, an unsolicited offer from Qatar Airways about the Middle Eastern airline's intention to acquire at least a 10 percent stake in American Airlines was received recently, the airliner said on Thursday.
American said in a statement that following a conversation between the two companies' CEOs, which was initiated by Qatar Airways' CEO, Akbar Al Baker, the notice advised that Qatar intends to purchase at least $808 million in the U.S.-based airline.
The total market value of American Airlines is about $24 billion.
Along with the appropriate filings required under the Hart-Scott-Rodino (HSR) Act, it will respond to the notice "in due course", American said. The companies have confirmed that with respect to its potential investment in American Airlines common stock, Qatar Airways has submitted a filing under the HSR Act.
It has just been weeks that ties with Doha, Qatar’s capital, were cut, in a diplomatic row, by neighbor Saudi Arabia, which led other nations including Egypt, the United Arab Emirates and Bahrain joining the row and this bit of news comes amidst the row still being unresolved.
There was a rise of 5 per cent in the shares of American Airlines following revelation of this news.
Also climbing higher following this announcement were the shares of other airline stocks, such as Southwest, Delta and JetBlue.
The total percentage of foreign voting interest in its business is limited to 24.9 percent by foreign ownership laws in the U.S. and this has been noted and communicated by American.
Without advance approval from the board and following a written request, anyone acquiring 4.75 percent or more of its outstanding stock is prevented by the bylaws of the company itself, American also said.
American declined to comment beyond what was in its Thursday press release and a representative from Qatar didn't immediately respond to a request for comment.
While arguing they receive subsidies and have potentially hurt U.S. carriers as a result, American's CEO, Doug Parker, has been extremely vocal in blasting Gulf carriers, like Qatar, and therefore this news might come as a surprise for many.
However, so long as Qatar doesn't exceed the 24.9 percent ceiling, a deal like this couldn't be stopped by Parker.
Including South America's LATAM Airlines Group and Italy's Meridiana, Qatar Airways has been seen scooping up stakes in several other airlines.
"The proposed investment by Qatar Airways was not solicited by American Airlines and would in no way change the Company's Board composition, governance, management or strategic direction," American said in a statement.
"It also does not alter American Airlines' conviction on the need to enforce the Open Skies agreements with the United Arab Emirates and the nation of Qatar and ensure fair competition with Gulf carriers, including Qatar Airways. American Airlines continues to believe that the President and his administration will stand up to foreign governments to end massive carrier subsidies that threaten the U.S. aviation industry and that threaten American jobs."
Including Warren Buffett’s Berkshire Hathaway, which has a 10 percent stake, American had five shareholders above the 4.75 percent threshold, according to March and April filings with the Securities and Exchange Commission.

Christopher J. Mitchell

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