American Airlines shares rocket on takeover talk

Posted on July 24, 2007
Filed Under Stocks |

Shares of AMR Corp., parent company of American Airlines, rose more than 7 percent Monday on the basis of possible, but persistent takeover of the company.

American was among several US airlines, earlier this year, said to have been looking for merger partners. There were also speculations of major airlines like American, to be potential targets for private equity firms. Furthermore, Goldman Sachs analyst also raised his earnings estimate for AMR shares on presumtion that the price of jet fuel will fall relative tot he price of crude oil in the fourth quarter of 2007 and all of 2008.

So is AMR really being bought? Totally depends on the validity of the chatter across multiple sources. Whatever the case may be, this is just another prime example of takeover talks resulting in unusual bullish behavior in the markets. Last week I mentioned Canadian Pacific Railway’s takeover rumors were probably overreacted to (which they were by the way); this may be just another example of the “spread takeover rumors and let stocks rise”-trend.

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