Question

How was the merger between United and Continental structured? Which is the survivor? Who holds what stock after the merger?

Answer 1

• The merger process started in May 2010 and took a considerable time to get an operating certificate.
• Both the airlines had taken losses in the recession and expected the merger to generate savings of more than $1 billion a year
• One reason to merge was to reduce costs and one way to do that was by consolidating information technology (IT) systems.
• The Board of Directors at Continental and United Airlines approved a stock-swap deal that would combine them into the world's largest airline on May 2, 2010. The agreement was executed on 1 October 2010, forming United Continental Holding Inc. (United).
• A merger agreement was reached between United and Continental Airlines.
• To effect the merger, Continental shareholders received 1.05 shares of UAL stock for each Continental share, effectively meaning Continental was acquired by UAL Corporation
• At the time of closing, it was estimated that United shareholders owned 55% of the merged entity and Continental shareholders owned 45%