Bloomberg News

Lan, Tam Gain on Bets Chile to Back $4.1 Billion Acquisition

July 05, 2011

(Updates with closing prices.)

July 5 (Bloomberg) -- Lan Airlines SA and Tam SA, Latin America’s largest carriers by sales, gained on speculation Chile’s antitrust tribunal will approve the Santiago-based company’s $4.1 billion takeover of its Brazilian rival.

Lan advanced 2.2 percent in Santiago trading to 13,904 pesos, the highest price since Jan. 28, at 4:15 p.m. New York time. Tam jumped 4.6 percent to 36.46 reais in Sao Paulo, the steepest increase since Jan. 12.

The Chilean tribunal, known as TDLC, is studying the merger proposal at the request of a consumer defense association. Lan said July 1 that German regulators had approved the tie-up, which made investors more optimistic on a favorable ruling in Chile, according to Ignacio Spencer, who covers Lan for IM Trust in Santiago. The deal was first announced in August.

“After the German approval, sentiment toward the Chilean antitrust process has changed,” Spencer said.

Alejandro Domic, a TDLC spokesman, wasn’t immediately available to comment, an assistant said by phone. Tam said in an e-mailed statement it has no new information on the deal. A press official at Lan didn’t immediately respond to an e-mail.

Analysts Marcelo Varejao at Socopa Corretora in Sao Paulo and Mabel Weber at BICE Inversiones in Santiago said today that investors are betting the tribunal will rule this month in favor of the acquisition.

“The market is awaiting this news,” Varejao said in a telephone interview. “There’s nothing else” to justify today’s gains, he said.

Tam’s Mauricio Amaro, who will be chairman of the combined company, said May 26 he’s “confident, but not sure” of regulatory clearance. The transaction is also subject to approval from Brazil’s antitrust agency, known as Cade.

Lan’s advance marked its 12th consecutive session of gains, the longest streak in a year. Tam reached the highest level since Feb. 17.

--With assistance from James Attwood in Santiago. Editors: Marie-France Han, Brendan Walsh

To contact the reporters on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net; Eduardo Thomson in Santiago at ethomson1@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net


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