Unassociated Document
Filed by
Lan Airlines S.A.
pursuant
to Rule 425 under the
Securities
Act of 1933, as amended.
Subject
of the offer: TAM S.A.
(Commission
File No.: 1-32826)
Investors
Why
are we pursuing a business combination as opposed to a stronger
alliance?
LAN and
TAM have entered into a non-binding Memorandum of Understanding that outlines
their intentions to combine their holdings under a single parent entity. The
combination of LAN and TAM would create a Latin American global airline group
that would be better able to serve customers across the continent and around the
world. As a single entity, LATAM would be able to capture greater
synergies, and grow more rapidly than would otherwise be possible if LAN and TAM
continue to exist as two separate entities.
Furthermore,
a combined carrier group would be better able to compete on a global scale –
which is key in today’s environment of airline consolidation.
What
are the expected synergies from the transaction?
The
combination is expected to generate annual synergies of approximately US $400
million. These synergies are expected to come broadly in equal
proportion from alignment of the passenger networks, growth in the cargo network
(both internationally and in Brazil), and reduced cost. Management
expects that it would be able to implement approximately one third of the
synergies within the first year following the close of the transaction and all
synergies by the end of the third year.
How
is the transaction structured, and where will the stock trade?
The
all-stock transaction would consolidate the economic interests of LAN and TAM
under a single parent entity while satisfying the foreign ownership and control
requirements of each country where they operate. In connection with
the transaction, LAN Airlines S.A. would be renamed LATAM Airlines Group (LATAM)
and would serve as the parent company that would coordinate and align activities
for all group holdings. TAM shareholders would be offered 0.90 shares of common
stock of LATAM for each share of TAM.
LATAM
would retain its listing in the Santiago stock exchange and its ADR listing in
the New York Stock Exchange and plans to list its shares, via BDRs, in the
Bovespa in Brazil.
What
is the expected dividend policy?
The
dividend policy would be decided by the new Board of Directors after the
transaction closes. Until that time, each company’s dividend policy is expected
to remain in place.
What
are the risks to the creation of LATAM Airlines Group?
We
believe that there is minimal integration risk. The route networks of LAN and
TAM have very little overlap, and many aspects of the businesses would remain
unchanged. LAN and TAM brands would continue to operate as distinct airlines and
independent brands, and employee groups would benefit from increased
opportunities created by the new airline.
How
does the combination impact LAN’s cooperation with AeroOasis in
Colombia?
There are
no changes to LAN’s plan in Colombia. LAN will continue supporting AeroOasis
through the certification and startup process. If regulatory approval is
received, LAN would like to acquire AeroOasis and make it part of its company.
The new carrier would become part of LATAM Airlines Group.
Forward
Looking Statements
This
document contains forward-looking statements, including with respect to the
negotiation, implementation and effects of the proposed combination. Such
statements may include words such as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe,” “would” or other similar
expressions. Forward-looking statements are statements that are not
historical facts, including statements about our beliefs and
expectations.
These
statements are based on current plans, estimates and projections, and,
therefore, you should not place undue reliance on them. Forward-looking
statements involve inherent risks and uncertainties. We caution you that a
number of important factors could cause actual results to differ materially from
those contained in any forward-looking statement. These factors and
uncertainties include in particular those described in the documents we have
filed with the U.S. Securities and Exchange Commission. Forward-looking
statements speak only as of the date they are made, and we undertake no
obligation to update publicly any of them, whether in light of new information,
future events or otherwise.
ADDITIONAL
INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION AND WHERE TO FIND
IT:
This document
relates to a proposed business combination between Lan Airlines S.A. (“LAN”) and
TAM S.A. (“TAM”), which will become the subject of a registration statement and
prospectus to be filed with the SEC by LAN and a new entity to be formed in
connection with the combination. This document is not a substitute for the
registration statement, prospectus and offering materials that LAN and the new
entity will file with the SEC or any other documents that they may file with the
SEC or send to shareholders in connection with the proposed combination.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT,
PROSPECTUS, EXCHANGE OFFER DOCUMENTS AND ALL OTHER RELEVANT DOCUMENTS FILED OR
THAT WILL BE FILED WITH THE SEC AS THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION. All such
documents, if filed, would be available free of charge at the SEC’s website
(www.sec.gov) or by directing a request to LAN, through Gisela Escobar Koch, at
56-2-565-3944 or by e-mail at gisela.escobar@lan.com, or to TAM through Jorge
Helito, at 55-11-5582-9715 or by e-mail at jorge.helito@tam.com.br.