Peep this chart, bruh:
As we covered earlier this week, Alaska Air announced its $2.6 Billion acquisition of Virgin Americas. Alaska plans to acquire Virgin through a 47%-premium stock offer.
In the chart above, you can see how the stock market and shareholders of each airline company reacted to the news. By the end of the week, Virgin Americas’ stock price finished up +60%. Basically, investors who owned Virgin stock just hit the jackpot. Shareholders of VA must have straight up been licking their chops when initially hearing of the acquisition. I mean, a 47% premium?!? That kind of investment gain over night only happens to market players once or twice in a lifetime.
As for Alaska shareholders…. let’s just say they aren’t too jacked up about all of the potential synergies that their firm will be gaining. While I’m sure many Alaska shareholders are happy that the company was able to grow through an acquisition, it seems most feel a 47%-premium was going a bit overboard. Alaska Air’s stock price finished up the week down 1.40% following the news of the transaction. That may seem like a tough week… until you peep this follow-up chart, bruh:
As the market was ready to open up this week following the news of Alaska’s acquisition, AA’s stock price plummeted 7.3% immediately. Now THAT would have been a tough loss to swallow following the 47%-premium bid. But as you can see, AA’s stock price recovered and finished up almost at break-even by the end of the week. It’ll be interesting to see where Alaska’s share price heads going forward. I expect Virgin to stay relatively break-even in the short-term following the massive increase.