Incredible Offer for NWA, Pan Am : Would-Be Investor Halts Trading With Announcement

A New York man on Tuesday raised corporate eyebrows and some Wall Street doubts by issuing a news release claiming that he leads a group that is planning to simultaneously acquire Pan Am Corp. and NWA Inc., the parent of Northwest Airlines, for a total of $4.9 billion.

New York Stock Exchange officials temporarily stopped trading on NWA and Pan Am stock when they received word of the statement. NYSE officials later raised questions about the seriousness of the statement and trading was resumed later in the day. NWA stock closed up $2.125 at $106 a share. Pan Am stock rose 37.5 cents to $4.75.

The statement, issued in New York, said Michael Sterns of Trans Global Holdings Inc. was in the final stages of creating an investor group that might bid up to $130 a share for NWA and up to $7 per share for Pan Am. Trans Global was identified as a privately held New York-based holding company.

The statement said further information could be forthcoming by next week but did not indicate who would finance the plan. Stern, identified as chairman of Trans Global, declined to provide any background on himself, the company or its plans.

“It’s not a hoax,” he told the Associated Press.

Northwest spokesman Alan Muncaster said Stern had requested financial information from Northwest but had not submitted any financial information of his own to the airline. “Let’s wait and see if we get an offer before speculating on whether this is a hoax,” Muncaster said.

Pan Am spokesman Jeff Kriendler, however, said Stern had shown previous interest in acquiring Pan Am but “never has been able to demonstrate any financial support, and in view of that history we would not view this proposal as being credible.”

A spokesman for the NYSE, Richard Torrenzano, also said the proposed deal is questionable or bogus.

Joseph Bartlett, former undersecretary of the U.S. Commerce Department and a New York University law professor specializing in corporate takeovers, said legitimate corporate suitors normally reveal their financial backers and information on their financial stake in the target company.

Northwest, which has been a takeover target since late March, has invited interested buyers to submit bids by May 30. Pan Am announced May 9 that it might submit an offer, but it was continuing to seek financing.

Stern’s statement said there would be no breakup of either airline if the acquisition is completed.

The statement also said the Stern group of investors would pay about $29 billion for 300 new aircraft and parts, bringing the total cost of the deal to $34 billion, making it “the largest corporate transaction ever.”