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American buys Reno Air
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November 19, 1998: 9:53 a.m. ET
Pays $124M for partner, will increase its West Coast presence
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NEW YORK (CNNfn) - American Airlines on Thursday agreed to buy Reno Air for $124 million in a bid to regain a strong market presence in the Western United States.
American Airlines, a subsidiary of AMR Corp., said its cash tender offer for Reno Air will commence no later than November 25. In the offer, American will acquire all of Reno's common shares outstanding for $7.75 apiece, a slight premium over its current trading price.
American also will make a tender offer for all of Reno's outstanding 9 percent Series A Cumulative Convertible Exchangeable Preferred Stock at $27.50 per share.
Reno's (RENO) shares closed Wednesday at 7-1/4 on the Nasdaq stock exchange.
American forged a marketing partnership with Reno Air in 1993, but the company said there is "virtually no overlap" on the routes served by the two carriers.
"Acquiring Reno will give our customers the benefits of a more comprehensive travel network throughout the U.S. and around the globe, " said Don Carty, chairman and chief executive of AMR and American Airlines. "Reno's West Coast route system will enhance both the AA network and the networks of our Oneworld partners."
Carty said American was forced to withdraw from the West Coast market in the early 1990s, eventually closing its San Jose, Calif., hub and entering into an AAdvantage frequent flyer partnership with Reno Air to maintain a West Coast presence.
"Since then, we have vastly strengthened our overall domestic and international route network and have entered into alliances with a number of carriers, all of which will make us a much more vigorous competitor in the west," Carty said.
Shares of AMR Corp. (AMR) finished Wednesday at 64-3/4 on the Big Board. 
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American Airlines
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