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Workforce Integration and the Dissipation of Value in Mergers: The Case of USAir's Acquisition of Piedmont Aviation

Author

Listed:
  • Kole, S.R.
  • Lenh, K.

Abstract

In November 1987, USAir Group acquired Piedmont Aviation for $1.6 billion in cash tender offer. Following the acquisition of the two carriers, the new USAir incurred huge operating losses, became the last profitable major airline, sustained a large reduction in its stock price, eliminated its dividend, and came close to bankruptcy. We examine USAir's acquisition of piedmont and its post-merger performance to address the following question -- how can the combination of two highly profitable firms dissipate so much value?

Suggested Citation

  • Kole, S.R. & Lenh, K., 1997. "Workforce Integration and the Dissipation of Value in Mergers: The Case of USAir's Acquisition of Piedmont Aviation," Papers 97-07, Rochester, Business - Financial Research and Policy Studies.
    • Handle: RePEc:fth:robufr:97-07
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    Cited by:

    1. Kole, Stacey R. & Lehn, Kenneth M., 1999. "Deregulation and the adaptation of governance structure: the case of the U.S. airline industry," Journal of Financial Economics, Elsevier, vol. 52(1), pages 79-117, April.
    2. Lars-Hendrik Röller & Johan Stennek & Frank Verboven, 2006. "Efficiency Gains from Mergers," Chapters, in: Fabienne IIzkovitz & Roderick Meiklejohn (ed.), European Merger Control, chapter 3, Edward Elgar Publishing.

    More about this item

    Keywords

    ENTERPRISES ; MERGERS ; AIR TRANSPORT;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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