Alaska Air Group to merge with Virgin America in $4bn deal

Alaska Airlines parent company Alaska Air Group said on Monday it was acquiring Virgin America in a friendly takeover worth around $4 billion including debt to create the US’s fifth-largest airline.

A definitive merger agreement had been unanimously approved by the boards of both companies, it said in a statement.

Alaska Air will pay $57 in cash per share for Virgin America, or a total of $2.6 billion. In addition Alaska Air is taking on Virgin’s debt and aircraft lease operations.

Virgin founder Richard Branson is a major shareholder in Virgin America and took the airline public in 2014.

“The combination expands Alaska Airlines’ existing footprint in California, bolsters its platform for growth and strengthens the company as a competitor to the four largest U.S. airlines,” it said.

The newly merged company will be headquartered in Seattle, it said.

The combined group is expected to have annual revenues of around $7 billion.

Synergies, or savings, from the merger are expected to come it at about $225 million per year once they are fully integrated, it said.