The Never Ending Rumor: Hawaiian Holdings, Inc. (HA) and More

Page 1 of 2

A company’s stock surged, and it wasn’t because of a partnership, new technology developments, or the announcement of a new customer or market. It was another buyout rumor. Some companies are clearly more viable and attractive takeover targets than others–but among these companies, there are a few that exist under the perpetual rumor of a coming buyout. This takeover limbo can exist for weeks, months, or even years. Here we will take a look at three wildly different companies that live everyday in this about-to-be-bought life.

Hawaiian Holdings, Inc. (NASDAQ:HA)No need for takeoff

Airline mergers have been a major trend reshaping a multi billion dollar industry over the past several years. With the tie-up between US Airways Group, Inc. (NYSE:LCC) and American Airlines this trend is being brought to the forefront once again. However, during the course of this airline buyout fever, Hawaiian Holdings, Inc. (NASDAQ:HA), parent company of Hawaiian Airlines, has frequently been the next airline to be bought out–yet it never has.

Arguments for a buyout include the access Hawaiian Airlines has to the Hawaiian and emerging Asian markets. Additionally, Hawaiian does not currently have a place in any airline alliance, making it even more of a free agent among airlines. But Hawaiian has been the subject of buyout rumors by most major airlines at one time or another, so much so that Hawaiian rarely bothers to comment on these speculative rumors today.

Compared to the legacy carriers and even Southwest Airlines Co. (NYSE:LUV) and Alaska Air Group, Inc. (NYSE:ALK), Hawaiian is a dwarf in a land of giants. With a market capitalization of under $300 million, Hawaiian is not prohibitively expensive for a takeover by a major carrier, many of which are sitting on billions in cash. But Hawaiian appears to want to continue growing organically. The airline placed a nearly $3 billion order for a new fleet of Airbus jets and continues with its expansion plans into the Asian markets and across North America. Based on Hawaiian’s size, a buyout of this airline would not shake up the industry as a US Airways American Airlines deal would; rather it would be more on the scale of the equity purchase of Virgin Airways by Delta Air Lines, Inc. (NYSE:DAL), which resulted in around $360 million changing hands.

Getting the cheap phone

It appears that Research In Motion Ltd (NASDAQ:BBRY) is finally finished. However, Blackberry will pick up where RIM left off. After falling from nearly $150 per share in 2008, RIM shareholders were looking at a loss of over 90 percent–that is until the stock began to rebound on news surrounding the new launch of Blackberry 10. While the stock has certainly been volatile, it is still up well over 100 percent from its $6 lows.

For companies looking to enter the smartphone business, Blackberry has frequently been used as an example for a buyout. The hardware and software company has a huge patent portfolio, connections in the business world, and a user base of around 80 million people. For a second, it appeared that a takeover was closer when Chinese manufacturer Lenovo implied that RIM was on its list of potential takeover targets. However, Lenovo dispelled the rumor shortly thereafter and RIM returned to its pre-rumor stock value.

When one assesses the chances of a Blackberry takeover they need to factor in more than the user base and the patent portfolio. Investors must also factor in that the Canadian government would carefully examine any deal and has previously stated that it wants Blackberry to grow “organically.” For Blackberry, a partnership deal is more likely to be announced than a full buyout as the company rolls out its new line of BB10 devices.

Page 1 of 2