SkyWest Announces ExpressJet Purchase for $133M, Weak 2Q Earnings

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SkyWest, Inc. (NASDAQ:SKYW) announced Wednesday it will buy ExpressJet Holdings (NYSE:XJT) for $133 million.

Shares of ExpressJet nearly doubled on the news.

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The acquisition will allow Atlantic Southeast Airlines, SkyWest’s wholly-owned subsidiary, to acquire all outstanding shares of common stock of ExpressJet for $133 million, or $6.75 a share.

Law firm Tripp Levy subsequently announced Wednesday its investigation into the acquisition, as it believes ExpressJet may have not “adequately shopped itself around” before entering into the transaction, and may therefore be underpaid.

Some analysts have estimated the company’s true value to be at least $8 a share.

In addition to the merger, SkyWest also reported weaker-than expected second quarter earnings Wednesday, driven by a year-over-year decline in sales.

The airline posted a net income of $18.7 million, or 33 cents a share, compared with $26.2 million, or 46 cents a share, in the same quarter last year, and falling slightly below average analyst estimates of 38 cents a share.

Revenue for the St. George, Utah-based company was $649.8 million, compared with $698.8 million in the earlier-year period, and narrowly missing the Street’s view of $652.4 million.

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