Virgin Australia Announces Agreement to Acquire Skywest30/10/2012
Virgin Australia Holdings Limited (Virgin Australia) today announced that it has reached an in-principle agreement with Skywest Airlines Ltd. (Skywest, ASX:SXR, LSE:SKYW) to acquire 100% of the issued capital in Skywest pursuant to a scheme of arrangement (“Scheme”) that will be subject to the laws of Singapore ("Proposal").
The Proposal is subject to a number of conditions, including:
- The approval of the Securities Industry Council of Singapore (SIC) to the terms. The definitive conditional legal agreement(s) in relation to the Scheme will only be entered into on receipt of SIC approval.
- The approval of the Australian Competition and Consumer Commission, the Australian Foreign Investment Review Board and the Singapore High Court.
- The approval of Skywest shareholders at an Extraordinary General Meeting.
Under the terms agreed in-principle, Virgin Australia will offer Skywest shareholders consideration of AUD0.45 per share with AUD0.225 per share expected to be paid in cash and 0.53 new VAH shares for every Skywest share .
Virgin Australia Chief Executive Officer John Borghetti said: “If approved, this transaction will enable us to fast-track our advancement in the high growth fly-in-fly-out (FIFO) and regional markets, increasing competition in these important segments.
“We launched a regional network partnership with Skywest in October 2011 and now we will be able to realise the full potential of the operation through developing a more integrated network, service and frequent flyer program.
“Under the agreement, Skywest would become part of the Virgin Australia brand but will continue to operate under its current Air Operator’s Certificate (AOC) with its own CEO and management team, based in Western Australia. Importantly, we will invest to support the growth of Skywest, which will benefit jobs, business and tourism, particularly in Western Australia and throughout regional Australia”, Mr Borghetti said.
Under the terms agreed in-principle, subject to prior consultation with and (where applicable) the approval of the SIC, Virgin Australia has a discretion to elect at any time prior to the approval of Skywest shareholders to proceed to implement the acquisition of 100% of the issued share capital of Skywest by way of a pre-conditional or formal voluntary conditional general offer, either on the same or better terms as those which apply to the Scheme.
Shareholders should note that the Proposal remains subject to the approval of the SIC and the definitive conditional legal agreement(s) in relation to the Proposal will only be entered into on receipt of SIC approval. Virgin Australia will update the market when there are any material developments to report in relation to the Proposal.
In the meantime, shareholders are advised to refrain from taking any action in relation to their shares in Virgin Australia or Skywest, which may be prejudicial to their interests, and to exercise caution when dealing in the shares of Virgin Australia or Skywest.