LAN Says Brazil OKs Swap In TAM Takeover

May 8, 2012

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Chilean airline LAN said on Monday Brazil's stock market regulator approved a share swap to take over TAM, adding the move should happen within the next 10 days and help create one of the world's largest carriers.

The swap will pave the way for the creation of LATAM Airlines Group, which LAN added should happen by the end of the first half of the year.

Regulators in Chile and Brazil have already approved the multi-billion dollar takeover to create Latin America's biggest carrier and approval from stock market regulator CVM on Monday clears a final hurdle.

"The CVM issued the approval for the exchange offer... which, according to norms applicable in Brazil, will start within the next 10 days," LAN said in a statement to Chile's regulator.

Under the deal, TAM shareholders will get LAN shares at an exchange ratio of 0.9 per one share of TAM.

The merger would create an airline with annual revenue of USD$10.4 billion, based on 2010 figures. When the merger plan was announced last August, the all-stock transaction was worth an estimated USD$2.7 billion.

Chile's supreme court last month rejected appeals by LAN and TAM to lift conditions imposed on the merger by a local antitrust regulator.

The airlines said in October they did not expect the conditions to reduce expected synergies by more than USD$10 million. LAN initially estimated savings of around USD$400 million.

The merger could result in a higher-than-expected increase in pre-tax operational revenues of up to USD$700 million for the new carrier LATAM, TAM said in a securities filing in January.

The US Securities and Exchange Commission must also approve the swap.