UAL Corp., the parent of United Airlines, could trigger a takeover battle today if it rejects a buyout offer from Los Angeles billionaire Marvin Davis.
Other potential bidders said to be eyeing the airline are Texas billionaire Robert M. Bass, New York investor Saul P. Steinberg, the Pan Am Corp. and Trans World Airlines Inc., which is owned by New York investor Carl C. Icahn. It was also speculated that UAL's management might try to finance its own buyout.
The president of United's flight attendants' union said the 13,000-member group might be receptive to a management buyout, despite the fact that there have been nearly two years of difficult contract talks with little progress.
"The most important issue to us is job security," said Patricia Friend, president of the Assn. of Flight Attendants at United.
$250 a Share Predicted
The board of Chicago-based UAL is scheduled to consider Davis' bid for the airline at a meeting today. Though details of Davis' proposal have not been disclosed, it is said to be well over $200 a share, or about $4.32 billion. UAL, which on Monday characterized Davis' bid as "highly conditional," is expected to reject the offer.
UAL's stock price, which soared $46.25 Monday, continued to rise Tuesday, closing at $219.25, up $8.50, in trading on the New York Stock Exchange. Analysts said bidding for the airline company could go as high as $250 a share. The stock has sold for as little as $86.50 during the past year.
"I expect additional bids, either from outside investors, or from inside the company in the form of a management buyout, or from another airline," said Louis A. Marckesano, an airline industry analyst with the Janney Montgomery Scott investment firm in Philadelphia. Marckesano said Pan Am, the parent of Pan American World Airways, was the most logical airline bidder for UAL.
Money-losing Pan Am, with the support of two New York investment banks and a Texas partnership that included billionaire brothers Sid and Lee Bass, made an unsuccessful bid for NWA Inc., the parent of Northwest Airlines, earlier this year. Pan Am Chairman Thomas G. Plaskett has said that the airline must find a partner to survive in the long term.
Airline industry analysts say United would fit well with Pan Am. Though United has an impressive domestic route system, as well as a network of Pacific basin flights, it lacks European routes. Pan Am, on the other hand, serves many points in Europe, but has an insignificant domestic route system.
Asked in a June interview whether he might consider buying United, Plaskett told The Times, "You have to think big."
One possible stumbling block for Pan Am is that United would be more expensive than Northwest, which was acquired by Los Angeles investor Alfred A. Checchi for $3.35 billion. But Marckesano said, "They put together a bid for Northwest. I think they could put together a similar type bid for United."
Analysts said TWA also might consider a bid for United. Contract talks with its machinists' union were suspended last week after TWA announced that a corporate change as the result of a merger or combination with another airline was possible. But several observers said a TWA merger with United is unlikely.
Bruce Benteman, a Kansas City analyst who puts out a newsletter called Wealth Monitors, said his sources indicate that TWA's chairman, Icahn, owns no UAL stock. Though TWA needs aircraft to expand its fleet, a UAL acquisition is probably too large for Icahn, Benteman said.
A Washington lawyer, who specializes in regulatory matters involving airlines, said a merger between TWA and United would raise antitrust questions. "There is much more overlap domestically between TWA and United than there is between Pan Am and United," he said. "I think the Justice Department would look very closely at the transaction."
Observers said Steinberg, a close friend of UAL Chairman Stephen M. Wolf, is not likely to make a serious effort to win control of the company. Steinberg, who owns 6.9% of UAL, is more likely to sell his stock and take a profit, analysts said.
Benteman said Robert Bass, whose investments include American Savings & Loan, also might bid for UAL. Bass, brother of Sid and Lee Bass, is rumored to own between 2% and 3% of the airline company's shares. "He likes to buy into companies with good management and undervalued assets. . . . I imagine he's involved in United," Benteman said.
But he added that Bass, too, will not be drawn into a bidding war. "If he can't get a company on the cheap, he'll let someone else buy it."