Skywest tries to buy Expressjet....Rejected
 

Press ReleaseSource: ExpressJet Holdings, Inc.

ExpressJet Special Committee Rejects SkyWest's Unsolicited Proposal and Commences Review of Strategic and Operational Alternatives
Friday April 25, 9:19 am ET
HOUSTON, April 25 /PRNewswire-FirstCall/ -- ExpressJet Holdings, Inc. (NYSE: XJT - News) today announced that a Special Committee composed of independent outside members of its Board of Directors has unanimously rejected a proposal from SkyWest, Inc. (Nasdaq: SKYW - News) to acquire the Company for $3.50 per share in cash.
The Special Committee, which was formed to evaluate the SkyWest proposal, has commenced a full review of strategic and operational alternatives available to ExpressJet. The strategic review will include, among other options, immediately engaging in discussions with SkyWest and other potentially interested parties to evaluate a merger at a higher price, as well as entering into discussions with Continental Airlines, Inc. regarding a new capacity purchase agreement.
The Special Committee reached the decision to reject the SkyWest proposal after careful consideration, including a thorough review of the proposal with Goldman Sachs & Co., its independent financial advisor, and Abrams & Laster LLP, its independent legal advisor. In making its determination to reject the SkyWest proposal, the Special Committee considered a number of factors, including:
-- The Special Committee believes that the fair value of the Company's stock is substantially higher than the current SkyWest proposal and the $3.50 per share price proposed by SkyWest does not fully and fairly reflect the inherent value of ExpressJet or its prospects, whether as a stand-alone company or part of a larger entity. -- While the Special Committee recognizes that a combination of ExpressJet and SkyWest would likely produce meaningful synergies, SkyWest's current proposal does not deliver the value of these synergies to ExpressJet's stockholders. Therefore, the initial SkyWest offer is inadequate and represents an opportunistic attempt by SkyWest to acquire the Company at a price well below the true value that ExpressJet would bring to a combination.
The Special Committee reaffirmed its confidence in management's ability to successfully execute the Company's current strategic plan. Pat Kelly, Chairman of the Special Committee, noted "The ExpressJet Board and management are committed to taking all appropriate and necessary actions to enhance value for ExpressJet stockholders. As the Special Committee reviews the strategic alternatives available to the Company, we have a solid management team and employees dedicated to providing our customers with exceptional service and conducting business as usual."
In making today's announcement, ExpressJet cautions its stockholders and others considering trading in its securities that there can be no assurance that any definitive offer will be made, any agreement will be executed, or any transaction will be approved or consummated. The Company does not intend to disclose developments relating to this review unless and until the Special Committee and its Board of Directors has approved a specific agreement or transaction.
Going forward, the Special Committee will work together with its financial and legal advisors to evaluate the Company's options and determine the course of action it believes is in the best interests of all ExpressJet stockholders.
ExpressJet Background
ExpressJet Holdings operates several divisions designed to leverage the management experience, efficiencies and economies of scale present in its subsidiaries, including ExpressJet Airlines, Inc. and ExpressJet Services, LLC. ExpressJet Airlines serves 175 destinations in North America and the Caribbean with approximately 1,500 departures per day. Operations include capacity purchase and pro-rate agreements for mainline carriers; providing clients customized 50-seat charter options; training services through its world-class facility in Houston, Texas; and ExpressJet branded flying, providing non-stop service to markets concentrated in the West, Midwest and Southeast regions of the United States. ExpressJet Services is the North American partner to three major European original equipment manufacturers and provides composite, sheet metal, interior and thrust reverser repairs throughout five facilities in the United States. For more information, visit http://www.expressjet.com.
Forward-Looking Statements Some of the statements in this document are forward-looking statements that involve a number of risks and uncertainties. Many factors could affect actual results, and variances from current expectations regarding these factors could cause actual results to differ materially from those expressed in these forward-looking statements. Some of the known risks that could significantly impact revenues, operating results and capacity include, but are not limited to: the company's continued dependence on Continental for the majority of its revenue; Continental's ability to terminate the capacity purchase agreement with the company; potential loss of access to aircraft, facilities and regulatory authorizations, as well as any airport-related services that Continental currently provides to ExpressJet; ExpressJet's new operations are less profitable than historical results; competitive responses to the company's branded entry into new markets; certain tax matters; reliance on technology and third-party service providers; flight disruptions as a result of operational matters; regulatory developments and costs, including the costs and other effects of enhanced security measures and other possible regulatory requirements; and competition and industry conditions. Additional information concerning risk factors that could affect the company's actual results are described in its filings with the Securities and Exchange Commission, including its 2007 annual report on Form 10-K. The events described in the forward-looking statements might not occur or might occur to a materially different extent than described herein. The company undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

http://biz.yahoo.com/prnews/080425/nyf024.html?.v=101

Boy this industry just keeps getting more interesting by the day....I guess Skywest is either looking to expand....or Expressjet is up for sale...I hope Skywest is looking to expand....Good Luck you guys at Expressjet...I have many friends there

Nice try Skywest management. Might need to up it to around $10-$15 to make it work. We have at least $500 million in assets. Don't think the shareholders are that stupid to sell all that for $200 million. Glad our management stuck to its guns again. All this shows me is that ExpressJet is a very good company.

Stock just jumped 30%. Man I love our management. I guess I should thank Skywest management because their offer shows how undervalued our stock is right now and it shot up. Should get interesting.

3.50 was to much anyway

Spoke too soon. Stock up 50% as of now, past $3.

Guess the $3.50 offer makes it valued to at least that now?

please please please please buy mesa... please...
:D

thats funny,

Let the battle of the KoolAid begin.

Snide remarks aside, do you guys really have $500m in assets? My understanding was that the leases on most of your jets were from Continental and that even your training center was paid for by them. In fact, I thought the only thing you guys owned was a paint shop down in Mexico... Care to provide some proof (key word proof) of the contrary?

Gladly help you out.

It's called a SEC filing. Check out XJT's 2007 SEC review. It states in there we have $500 million in assets which doesn't include contracts or leases since those aren't assets.

I honestly don't know what our total assets are. I do know that there is $220M cash in the bank... as of recurrent training two weeks ago. Beyond that, I don't know.

As for SKW management, I don't think it was a "nice try" at anything. I think it is smart to try to get a good deal on a good company, i.e. employee group. I don't know what our actual worth is or what our stock should be valued at, higher or lower, and I honestly don't give a crap. I also don't think it would be a bad thing if SKW was to purchase us because it would add stability. A purchase would not be my first choice of events to happen but it wouldn't really upset me.

I agree, but still worry

While you make a valid point, try make them without snide comments - i.e. "It's called..."

Back to the discussion...

For starters, we own the Training Center.

we do??????

Now you're getting into speculation that requires more thought and knowledge than I have. :D

Don't take that too serious, because basically I can say you made snide comment at me right there.

I researched our companies position in a fair amount of detail since I've been here and plenty of guys give me crap when I state positive information about it and say I am drinking the kool-aid. I just state that our company is pretty well off, but people think I'm full of it. What do you expect?

Careful about the "It wouldn't be a bad thing if SkyWest bought us" attitude. Ask a few ASA guys how it continues to work out for them. Here is a hint: even though few folks are hiring right now, ASA pilots are still finding ways to leave the company.

Good luck guys. Stay independent. You'll be happier.

My understanding was that it was an asset originally purchased by CAL, but sold off with us.

Email George. He'll tell you for sure.

Who knows maybe this would be the best thing for out pilot group [XJT]. If we lost any additional flying it very well might be game over for us and the Jims. The idea of a buyout but makes me very nervous, but let's be honest, would it put any of us out of a job. It's way to early to speculate what will happen WHEN SKYW buys us, but I have alot of faith in our MEC, and our pilot group. It should just work out fine, taking us out of the competitive field, and letting the other regionals fight it out. Were not in a great place right now boys, lets accept reality. I just WISH mgmg. at XJT would start talking, instead of keeping their "mums the word" attitude.

On a lighter note maybe this is just the push Mesa needs to go bye bye! :)

Getting bought by SKW now would probably be good for you guys. Your union and contract would be unaffected...which is not the case if things turn south later and you enter ch.11 before being bought.

If you get bought now, the branded stuff might go away, but JA would probably have some other scheme in mind to utilize the assets. What that would be, I have no idea.

in the world of airline mergers, the smart ones are the sellers...

Skywest may see some value in acquiring ExpressJet, but what that value is I do not know. Most people would shy away from buying control of more 50 seat jets, and the branded flying is a risky proposition that could be a huge liability as fuel costs rise. About the only benefit I see to buying ExpressJet is "buying" the business relationship with CAL. This is what Pinnacle did by acquiring Colgan, though they bought relationships with USAirways, United, and Continental for 20 million, not 200 million.

I see Skywest trying to get their foot in the door with CAL, much like CHQ/RAH did by going after some 50 seat flying under less than ideal terms. Skywest is a solid company with capital to acquire more 70+ seat jets. RAH's goal in flying 50 seaters for CAL was to trade up to 70+ seaters in short time.

Conclusion: SkyWest smells scope relaxation at CAL in the future, and wants to be positioned to make a deal with CAL when that happens. RAH is already at the party, and ExpressJet holds the only other invitation...

I don't know about that, you can expect branded to be dumped asap followed by the delta pro-rate with jets deal, as both are the reason xjt is bleeding so much cash. They would probably get rid of about 40 airplanes when all is said and done and you know what that means.

True, but ASA was STILL able to push a contract through. Whether or not SkyWest owning them affected much of it, I don't know. They HAD been in negotiations for YEARS even before they were bought.

The difference would be the differing fleet types. I guess SkyWest could funnel the planes to their side (a la EV's airframes), but it would be expensive for them to spool up a 145 program just for that purpose alone.

I suggest a little research before you go posting making a fool of yourself. The pro-rated deal with Delta is still generating a profit.

Guys here's a big reality check for some of you. IF (and that's still a pretty big IF) skywest was to buy XJT it would be a short/mid term loss for skywest, hence the low ball offer on the table to offset the cost that would be incurred in the acquisition. Based on that, I believe the forces that be at skywest will not tolerate the gamble at higher sticker price.

I guess they thought our stockholders/management were going to roll over and say "oh thank you for saving us".....

nice try though!

Usually skywest waits for the firesale anyway.

Maybe they should look at MESA then, they're a little closer to that.:rolleyes:

Not gonna happen.

Oh and by the way, CONTINENTAL holds the poison pill. No one can buy XJT without their say...now you guys think about that.

Well when you guys don't lose 20% of your market cap per fiscal quarter I'll believe you a little more.

Whats to say they aren't the ones pushing this? This happened 3 years ago when Skywest was given an offer they couldn't refuse for ASA.

Why would Continental care if SkyWest bought ExpressJet, as long as the flights continue to operate as normal?

Because it might be a way to get the cost down. XJT operates at a pretty healthy profit margin off of CAL.

This was posted by another member on the other Skywest tries to buy Expressjet forum, but I think it sums up the good that could come of this deal.

Regional consolidation (like major airline consolidation) is a good thing for the industry and pilots long term. I hope Skywest is able to get another (higher) bid in that Expressjet accepts. I think Skywest management made a good decision to try and buy Expressjet when their stock price was low. I like management teams that seize opportunity. I don't feel Expressjet pilots have anything to fear being owned by Skywest.

...............

Man, some of you guys just can't see the forest from the trees! They have the final say, and have to approve any potential buy out/merger etc.

Unless, skywest is willing to operate the Coex side at a potential loss, the rates we're giving CAL cannot get any cheaper, not to metion the fact that CAL already expressed interest in reducing it's regional jet feed...oh and did I forget scope? All of you guys excited about the prospect of flying your "big" regional jets for CAL, yeah well that one's not going to happen either, maybe post merger with United...this is where the plot thickens.

I'm telling you guys this is about 100 options with Embraer, and the possibility to expand, the question is: Is skywest willing to pay premium for it?

Who says xjt would be operating those flights?

Hate to steal your thunder, and I could be wrong. But it's been brought up on our message board numerous times. I believe the option count is now down to 75.

But yeah, those options would be valuable. But I wonder if SkyWest is willing to lay out the cost of spooling up a EMB program, as well as buy XJT.

Who says SKYW would.....last I checked XJT still has its name on the CPA.

The name is of the holding company, It would be changed if/when xjt is purchased since XJT holdings would cease to exist.

You're right it is 75.

What are you going to use? A CRJ200 from IAH to YYZ, or maybe a 200 from IAH-OAX. Dude, give it up, I know you're the official cheer leader for skywest on the forums, but it's not the fantasy world you think it is.