Delta Airlines 2010 Annual Report Download - page 91

Table of Contents
NOTE 12. NORTHWEST MERGER
On the Closing Date, Northwest became a wholly-owned subsidiary of Delta. Northwest was a major air carrier that provided scheduled air transportation
for passengers and cargo throughout the U.S. and around the world.
The Merger better positions us to manage through economic cycles and volatile fuel prices, invest in our fleet, improve services for customers and achieve
our strategic objectives. Benefits from the Merger include more effective aircraft utilization, a more comprehensive and diversified route system, reduced
overhead and improved operational efficiency.
As a result of the Merger, each share of Northwest common stock outstanding on the Closing Date or issuable under Northwest's Plan of Reorganization
was converted into the right to receive 1.25 shares of Delta common stock. We issued, or expect to issue, a total of 339 million shares of Delta common stock
for these purposes, or approximately 41% of the sum of the shares of Delta common stock (1) outstanding on the Closing Date (including shares issued to
Northwest stockholders in the Merger), (2) issuable in exchange for shares of Northwest common stock reserved for issuance under Northwest's Plan of
Reorganization, (3) reserved for issuance under Delta's Plan of Reorganization and (4) issuable to our employees in connection with the Merger. As of
December 31, 2010, we had issued 338 million shares of Delta common stock in connection with the Merger.
The purchase price paid to effect the Merger was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed from
Northwest based on their estimated fair values as of the Closing Date. The Merger was valued at $3.4 billion. This amount was derived from (1) the
339 million shares of Delta common stock we issued or expect to issue, as discussed above, at a price of $9.60 per share, the average closing price of our
common stock on the New York Stock Exchange for the five consecutive trading days that include the two trading days before, the day of and the two trading
days after the public announcement on April 14, 2008 of the then planned Merger and (2) capitalized Merger-related transaction costs. The purchase price also
included the fair value of Delta stock options and other equity awards issued on the Closing Date in exchange for similar securities of Northwest. Northwest
stock options and other equity awards vested on the Closing Date and were assumed by Delta and modified to provide for the purchase of Delta common
stock. The number of shares and, if applicable, the price per share were adjusted for the 1.25 exchange ratio. Vested stock options held by employees of
Northwest were considered part of the purchase price.
The purchase price was calculated as follows:
(in millions, except per share data)
Shares of Northwest common stock exchanged 271
Exchange ratio 1.25
Shares of Delta common stock issued or issuable 339
Price per share $ 9.60
Fair value of Delta common stock issued or issuable $ 3,251
Fair value of outstanding Northwest stock options 18
Delta transaction costs 84
Total purchase price $ 3,353
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