Texas Air Said Poised to Make Offer for People
NEW YORK -- Texas Air Corp. was poised late yesterday to make a formal offer to acquire People Express Inc., Wall Street sources said.</br></br>Directors of People Express were meeting here last night to discuss a possible takeover by Houston-based Texas Air. The sources said the bid would be about $4 a share in Texas Air securities, or about $105 million. In addition, Texas Air would provide a cash infusion of $30 million to $40 million in the form of a secured loan to the Newark, N.J.-based airline company.</br></br>The cash infusion would serve two ends. It would help financially ailing People Express make it through the lean autumn months ahead while the Department of Transportation considers the proposed purchase. And it would help insure that Texas Air would proceed to complete the acquisition. "We want to make it very painful for anyone who agrees to acquire People, if they fail to complete the deal," one source close to People Express said.</br></br>People Express's concern over completion of the transaction stems from the company's aborted sale of its Frontier Airlines subsidiary to Chicago-based UAL Inc.'s United Airlines unit, which was blocked by labor union problems. United pulled out of the agreement, People Express put Frontier into Chapter 11 Bankruptcy Code proceedings and it failed to get the $146 million United had offered. People Express did get about $50 million from United in exchange for certain Frontier assets.</br></br>The Texas Air proposal to acquire People matches the current market value of People Express, which closed at $4 a share, up 37.5 cents, in national over-the-counter trading Friday.