Oil and real estate tycoon Marvin Davis pledged Wednesday not to "bust up" Northwest Airlines if its parent company accepts his $2.6-billion takeover offer.
"Our planned financing will not necessitate the sale of any of the company's strategic assets," the Los Angeles millionaire said in a letter to NWA Inc.'s directors. In fact, he said, "our plan is to expand NWA's operations."
Meanwhile, NWA's shares rose on rumors that a second buyout proposal, valued at about $105 a share, was in the works by unidentified investors. Kevin Whalen, an NWA spokesman, said the company had not received a second offer.
In his letter, Davis did not say how he would finance the full purchase but said he would use some of his own money in the deal. He also seemed to suggest that he would sell NWA's valuable Japanese real estate, which is not crucial to the airline's operations. Airline analysts have estimated that Northwest's Japanese properties are worth at least $300 million, perhaps as much as $600 million.
"I don't see him doing anything to weaken the airline too badly," said Louis A. Marckesano, an airline industry analyst with the investment firm of Janney Montgomery Scott in Philadelphia. He said Davis' letter "puts the onus on the NWA board to come up with a definitive reason for not considering his offer." Whalen said NWA would make no comment on Davis' letter. He said the board would meet soon to review the proposal.
On another front, NWA shareholders are being asked to vote on a measure that would give NWA employees 90 days to come up with a counteroffer for the company in the event of a takeover. NWA's directors recommend a vote against the proposal "because it gives us less flexibility when considering offers," Whalen said.
In his letter, Davis said he would go ahead with Northwest's plans to buy much-needed, new aircraft. NWA has orders and options on 148 aircraft, worth $7.5 billion.
Davis' letter seemed to address concerns of government leaders in Minnesota, where the airline is based. Minnesota Gov. Rudy Perpich has vowed to fight a takeover of the airline if it involves selling aircraft or routes or moving the company's headquarters from Eagan, a Minneapolis suburb.