Updated: Legal Battle Unleashed | Lawsuit Aims To Halt Hawaiian Merger

Adding to a multitude of concerns facing two leading Hawaii-focused airlines, a new challenge has just surfaced. On January 10, 2024, a shareholder filed a lawsuit in New York District Court for the Southern District of New York challenging the acquisition of Hawaiian Airlines by Alaska Airlines.

This comes following Alaska’s plan to buy Hawaiian Airlines in a $1.9 billion deal that would allow them to capture forty percent of the Hawaii airline market. And, should that deal not be consummated, Hawaiian will face huge, and perhaps insurmountable, business headwinds. The company itself stated a need for acquisition due to expansion complexities, required modernization, and back-breaking $900 million in debt.

Securities lawsuit filed by one of Hawaiian’s shareholders, Deann Owen.

The lawsuit seeks to invalidate the $1.9 billion deal. Among the suit’s claims is that the transaction will damage Hawaiian’s shareholders and benefit select company insiders only.

The plaintiff claims that defendants violated Sections 14(a) and 20(a) of the Securities and Exchange Act of 1934 among other things.

Section 14(a) relates to the solicitation of proxies and requires disclosure of material information in connection with the solicitation of proxies for corporate meetings. This seeks to ensure that shareholders have the necessary information to make informed decisions when voting on company matters

Section 20(a) imposes liability on controlling persons for the actions of those that they control. This section is to hold individuals or entities accountable for the actions of those under their control as related to securities law violations.

The suit claims further that in an SEC filing, Hawaiian’s board agreed has now agreed to a $2 per share lower offer than the $20 that was previously indicated.

Who is named in the US District Court case filed against Hawaiian Holdings?

Named in addition to Hawaiian Holdings, parent company of Hawaiian Airlines is Hawaiian CEO Peter Ingram. In addition, other defendants include Hawaiian Chairman of the Board Lawrence Hershfield, Hawaiian board directors Michael McNamara, Crystal Rose, Wendy Beck, Earl Fry, Craig Vosburg, Richard Zwern, and Jayne Hrdlicka, and Hawaiian Special Preferred Stock Designees Daniel Akins, Duane Woerth, and Mark Schneider.

What to watch for next in the planned Hawaiian/Alaska deal?

In a related matter, Hawaiian disclosed in an SEC filing earlier this week that a special meeting of stockholders is scheduled for February 16 to vote on the merger/acquisition of Hawaiian Airlines. Shareholders will also consider compensation for named executive officers in connection with the purchase.

Also this week, Hawaiian and Alaska officially filed with the U.S. Justice Department for antitrust clearance to be given them in their proposed $1.9 billion deal. How that plays out may be a first indication of exactly what stance federal regulators may take in this deal.

That is the filing which outlines that shareholders are set to receive a premium of $18.00 cash for each share, which is nonetheless a substantial increase from the stock’s pre-acquisition announcement trading price. The Hawaiian Airlines Board has already approved the merger plans. Shareholder concurrence, however, is also required.

As we said previously, Hawaiian remains committed to Alaska’s proposal. However, until the deal is consummated, however, Hawaiian must remain independent and resilient. Thus, they are open to other offers, should any be forthcoming.

Big questions linger on about factors including the stance of U.S. regulators on the merger, in the current anti airline merger atmosphere. Do you have any concerns or other input?

Updated 1/12/24.