Sir Richard Branson says he is sad at the news that Virgin America, the budget airline he launched in the US market nine years ago, has been sold to rival Alaska Air.
The boards of the two companies have unanimously approved a $2.6bn (£1.8bn) buyout offer, which, when debt and airplane leases are taken into account, equates to a total value for the business of $4bn (£2.8bn).
Sir Richard owns around 30 per cent of the shares in the company. Having initially floated for $23 a share in 2014, valuing the business at $1.2bn, the $57-a-share buyout price means the billionaire's stake has more than doubled in value and the deal nets him proceeds of around £550m, reports The Guardian.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
But in a blog post, the businessman admitted to "sadness that our wonderful airline is merging with another". Citing US Treasury rules that mean non-US owners can control a maximum of 25 per cent of the voting shares in listed companies, he said there was "sadly nothing [he] could do to stop" the deal.
Sir Richard's VX Holdings owns 18 per cent of the voting rights in Virgin America, with the remainder of his stake held in non-voting shares.
He added that consolidation in the airline industry, which he has previously cited as bringing a focus on profits at the expense of passenger experience, "cannot be stopped".
He also claimed Virgin America was responsible for driving up standards, including introducing fleet-wide wifi internet connectivity and pushing down prices.
In a statement, Alaska Air said the deal would give it a "bigger business in California by expanding into San Francisco and Los Angeles", strengthening its ability to compete against larger US airlines, says the Guardian.
It added that the airline is currently valued at about $10bn (£7bn) and "flies from more than 100 cities in the US, Canada, Costa Rica and Mexico".
-
Labour shortages: the ‘most urgent problem’ facing the UK economy right nowSpeed Read Britain is currently in the grip of an ‘employment crisis’
-
Will the energy war hurt Europe more than Russia?Speed Read European Commission proposes a total ban on Russian oil
-
Will Elon Musk manage to take over Twitter?Speed Read The world’s richest man has launched a hostile takeover bid worth $43bn
-
Shoppers urged not to buy into dodgy Black Friday dealsSpeed Read Consumer watchdog says better prices can be had on most of the so-called bargain offers
-
Ryanair: readying for departure from LondonSpeed Read Plans to delist Ryanair from the London Stock Exchange could spell ‘another blow’ to the ‘dwindling’ London market
-
Out of fashion: Asos ‘curse’ has struck againSpeed Read Share price tumbles following the departure of CEO Nick Beighton
-
Universal Music’s blockbuster listing: don’t stop me now…Speed Read Investors are betting heavily that the ‘boom in music streaming’, which has transformed Universal’s fortunes, ‘still has a long way to go’
-
EasyJet/Wizz: battle for air supremacySpeed Read ‘Wizz’s cheeky takeover bid will have come as a blow to the corporate ego’
