California-based Virgin America said today that its shareholders have approved the air carrier’s merger with Seattle-based Alaska Air Group, clearing one of the major requirements for the $2.6 billion deal to take effect later this year.
Under the terms of April’s merger agreement, Virgin America’s investors will receive $57 a share, which would pay a nearly 50 percent premium on the stock price in effect just before the deal was announced.
Alaska Air Group, which is the corporate parent of Alaska Airlines, won out after a fierce bidding war with JetBlue. The merger will give Alaska a firmer foothold in California, particularly for high-traffic routes to New York and Washington, D.C. Alaska Air’s CEO, Brad Tilden, has said the combined company might still keep Virgin America as a brand that’s distinct from Alaska Airlines.
The Virgin brand would have to be licensed from British billionaire Richard Branson’s Virgin Group, at a cost that’s likely to amount to millions of dollars.
The biggest remaining hurdle to the merger is approval from the U.S. Justice Department, which has to determine whether or not the deal violates antitrust laws. The combined airline would rank No. 5 on the list of U.S. carriers, behind American, Delta, Southwest and United.
The two airlines expect to gain regulatory approval and complete the transaction in the fourth quarter of this year, Virgin America said in today’s announcement.