Israel’s flag carrier El Al Airlines, forced to slim down following a government bailout during the pandemic, announced on Thursday, February 3, it has entered a non-binding memorandum of understanding to buy smaller local rival Arkia, reported Reuters.
Under the proposed deal, Arkia would become a fully-owned subsidiary of El Al. In return, Arkia’s shareholders would get a 10%-14% stake in El Al through shares and options, the airline stated in a regulatory filing.
Arkia, in its own statement, stated the deal stipulates it would continue operating as an independent brand. “We still have a long way to go before the deal to acquire Arkia is completed, which is part of El Al’s strategy to expand into additional areas of activity,” said El Al chairman Amikam Ben Zvi.
Any deal would need approval from the government, Israel’s competition regulator, and the companies’ labor unions.
The companies hope to reach a binding agreement 30 days after a month of due diligence. After that they will have up to 150 days to complete the transaction.
El Al in 2018 had sought to buy another small carrier, Israir, but the competition regulator did not allow the merger.
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