This is a guest post written by TIME reporter Josh Sanburn.
Reports that a little-known Florida company offered to take American Airlines private has befuddled the airline, its stockholders and most analysts, and it appears that the entire offer is completely illegitimate.
On March 29, American Airlines received a letter from a company called Sterling Global Holdings, offering to buy the airline for $3.25 billion, which “represents a premium of 48% over today’s closing price,” the letter says.
Sounds pretty good, except that nobody’s really heard of Sterling Global Holdings or its head Allen Weintraub, multiple reports say a man with the same name has a questionable past with the SEC, and the company’s headquarters – supposedly in Davie, Fla. – is apparently in a non-descript, small, one-story building, not a typical ground zero for a company making multi-billion dollar offers.
The company made a similar proposition to Kodak about a week before, offering the photo giant $1.3 billion. (A Kodak spokesman has said the company believes it was a hoax.) So, what’s going on?
In a Q&A with the Dallas Morning News, Weintraub claimed to have plenty of money and backers for the deal, but American Airlines clearly doesn’t think the offer is genuine, saying that they have “no corroborating information to demonstrate the offer described in the letter is legitimate,” and they won’t comment further.
While Weintraub’s motives are unknown, another “Allen Weintraub” in the Miami area was caught in a Securities and Exchange Commission investigation in 2002, permanently barring him from serving as a permanent officer or director in public companies. It’s unclear if the two Weintraubs are the same man, however.
But the biggest red flag might be the companies that Sterling Global Holdings is going after. Historically, airlines are some of the worst investments around. Recessions often take down a few airlines with it, and the recent downturn forced five of the nine largest U.S. airlines to post losses in 2009, totaling around $4 billion.
Kodak has also taken some hits in recent years as it makes a gradual digital transformation. Last year, the CEO’s pay package plummeted 66 percent as it tried to pour money into inkjet printing and away from film. Its revenue fell 6 percent last year.
Sterling has yet to file with the SEC, and it appears both companies are just simply going to ignore the offers. And considering how bizarre both of them are, that seems about right.