Southwest Airlines to buy AirTran for $1.4 Billion (LUV)

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Airline operator Southwest Airlines Co. ( LUV ) on Monday announced it would buy fellow airline carrier AirTran for around $1.4 billion in a cash/stock deal.

The company will pay around $670 million in cash, with the rest coming via Southwest stock. AirTran shareholders will receive around $3.75 in cash and 0.321 Southwest shares for each share of AirTran they own.

The deal is expected to close by the end of this year.

Southwest CEO Gary Kelly said the move "offers customers more low-fare destinations as we extend our network and diversify into new markets, including significant opportunities to and from Atlanta, the busiest airport in the U.S. and the largest domestic market we do not serve, as well as Washington, D.C., via Ronald Reagan National Airport."

Southwest shares fell 40 cents, or -3.3%, in premarket trading Monday.

The Bottom Line
Shares of LUV have a .15% dividend yield, based on Friday's closing stock price of $12.28. The stock has technical support in the $10-$11 price area. If the shares can firm up, we see overhead resistance around the $14 price level. We would remain on the sidelines for now.

Southwest Airlines Co. ( LUV ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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