Alaska Air Group, a parent company of Alaska Airlines, said on Monday they had agreed to acquire Virgin America for $2.6 billion in cash.
The deal would mean two of the 10 biggest airlines in the United States would merge; it would also expand Alaska Airlines network in the lucrative Californian market, particularly in San Francisco and Los Angeles.
The transaction would be the latest of all the merge in the industry, concentrating power among a few major airlines.
Under the terms of the transaction, Alaska Airlines will pay 57$ a share, representing a 47% premium to the target company’s closing price on Friday.
Alaska Air’s chairman and chief exectuvive Brad Tilden said in a news release “We look forward to bringing together two incredible groups of employees to build on the success they have achieved as stand-alone companies to make us an even stronger competitor nationally.”
The deal is expected to draw close scrutiny from US regulators, who have concerns that further consolidation in the market could mean higher prices for customers. The transaction would allow Alaska Airlines to pass JetBlue and become the fifth biggest carrier in the United States.