Amid rumors about possible competing bidders, Los Angeles investor Marvin Davis said Friday that he signed a confidentiality agreement with UAL, the parent of United Airlines, allowing him to review the airline's financial documents.
Shares of UAL continued to decline Friday, closing at $280.25, down $1.50, in moderate trading on the New York Stock Exchange. Traders blamed the decline on rumors a large UAL shareholder, New York financier Saul P. Steinberg, was selling his stock, and news that the New York buyout firm Kohlberg Kravis Roberts & Co. isn't interested in bidding for the airline.
The Davis agreement was announced after the market closed.
As part of the agreement, Davis said he won't try to unseat UAL's board or make a hostile offer for the company unless UAL's board fails to sell the airline, or sells it for less than $300 a share--the size of a competing bid from United's pilots union and management. The agreement says that if Davis makes an offer under those conditions, he will pay at least $275 a share.
In a statement, Davis said his representatives would begin their financial review on Monday. "We believe this a step in achieving an outcome that will serve the best interests of UAL's shareholders and other constituents," Davis said in a statement. "We welcome this opportunity and look forward to working with UAL and its advisers to develop an attractive proposal."
Earlier in the day, a spokesman for the International Assn. of Machinists & Aerospace Workers said the union had been approached separately by KKR and by Texas investor Robert M. Bass to discuss possible offers for the airline. The IAM represents United's mechanics, ramp workers and baggage handlers.
However, a spokesman for KKR said the firm hadn't approached the machinists union and wasn't interested in making a bid. A spokesman for Bass declined comment.
Attendants May Join
Stock traders viewed the IAM's statement as a way of placing pressure on United's management and pilots union, which have joined with British Airways in a $300-a-share bid for UAL. The machinists have been critical of the bid, saying that United isn't worth more than $240 a share and that the debt-financed bid would hurt the airline.
United's flight attendants are exploring the possibility of joining the bid with United's pilots and management. Patricia Friend, president of the flight attendants, said her group was ambivalent about owning a stake in the airline. "It remains to be seen whether we can get full value for our investment in the airline," she said.
A meeting between representatives of United's management and flight attendants is set for Tuesday, Friend said.