Market Overview

Traders Doubting Lan Can Complete Tam Deal

Investors and traders are doubting that Chile's Lan Airlines (NYSE: LFL) will complete its proposed $4 billion takeover of Brazil's TAM SA (NYSE: TAM), according to Bloomberg News.

Tam is trading 18 percent below Santiago-based Lan's Aug. 13 offer price, as much as twice the discount for past global airline combinations a month after they were announced, according to data compiled by Bloomberg.

Investors are concerned that the deal may be killed or delayed due to regulatory concerns and that is the discount eleveated.

Tam investors are supposed to get 0.9 Lan shares for each of their shares. Brazilian and Chilean regulators must approve the deal, which calls for Tam's controlling shareholders to keep 80 percent of its voting stock to preserve Brazil's 20 percent foreign ownership cap, Bloomberg reported.

Lan will own 70% of the combined company assuming the deal goes through. The combined airline would be the world's third-largest by market value, Bloomberg noted.

Posted-In: Long Ideas News Rumors Small Cap Analysis Management M&A Global Pre-Market Outlook Intraday Update Markets Movers Trading Ideas

 

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