Delta looks to substantially increase holding in Groupo Aeromexico

Currently owning 4.2% of outstanding shares in Grupo Aeroméxico S.A.B. de C.V., Delta Air Lines is looking to acquire a further 32% of the outstanding capital stock which, if combined with current options to acquire 12.8%, would extend the airline’s holding and options to 49%.
Completion of the cash tender offer will be subject to a number of conditions, including the acceptance of the offer by a minimum of 25% of the current shareholders of outstanding stock, together with receipt of antitrust approval in Mexico.
According to Ed Bastian, Delta’s Chief Executive Officer: “This is the next step in expanding our longstanding relationship with Aeromexico, a partnership built on our shared commitment to our customers in the U.S. and Mexico. The tender offer and investment will further strengthen the relationship that will be established when our joint cooperation agreement is implemented in the second quarter.”
Delta and Aeroméxico began their first codeshare in 1994, while in 2011, the carrier entered into an enhanced commercial agreement with Aeroméxico. In 2012, Delta invested US$$65m in share acquisition of Grupo Aeroméxico, the parent company of Aeroméxico, and in March 2015, Delta and Aeroméxico entered into a joint cooperation agreement relating to flights between the United States and Mexico.
Both parties subsequently filed applications with the US DOT and the Mexican Comisión Federal de Competencia Económica (Federal Economic Competition Commission or COFECE), in relation to antitrust agreement and immunity. In April 2016 COFECE authorized the agreement subject to certain conditions, and in December 2016 the US DOT issued approval of, and immunity from antitrust laws in the US, again subject to certain conditions. Delta and Aeromexico accepted the conditions required by COFECE and DOT and are currently in the process of implementing the required remedies.