Alaska Air Group says to merge with Virgin America in $4bn deal

Alaska Airlines parent company Alaska Air Group said onMonday it was acquiring Virgin America in a friendly takeover worth around $4billion including debt to create the US's fifth-largest airline.

A definitive merger agreement had been unanimously approvedby the boards of both companies, it said in a statement.

Alaska Air will pay $57 in cash per share for VirginAmerica, or a total of $2.6 billion. In addition Alaska Air is taking onVirgin's debt and aircraft lease operations.

Virgin founder Richard Branson is a major shareholder inVirgin America and took the airline public in 2014.

‘The combination expands Alaska Airlines' existing footprintin California, bolsters its platform forgrowth and strengthens the company as a competitor to the four largest US airlines,’it said.

The newly-merged company will be headquartered in Seattle, it said.

The combined group is expected to have annual revenues ofaround $7 billion.

Synergies, or savings, from the merger are expected to comeit at about $225 million per year once they are fully integrated, it said.