Mesa Air Group Tuesday said it will scrap its unsolicited takeover bid for Atlantic Coast Airlines, a day after United Airlines abandoned its service agreement tied to the two regional carriers.
On Monday, United’s parent, UAL Corp., ditched its deal with Phoenix-based Mesa to provide service out of , Washington Dulles International Airport. Under the deal, Mesa would have taken over certain United Express East Coast routes out of Dulles, located in Northern Virginia, which are now operated by Atlantic Coast.
The news sent shares of Dulles, Virginia-based Atlantic Coast tumbling in trading on Instinet before the market opened on Tuesday. The stock fell 13 percent from Monday’s Nasdaq close of $9.20.
Mesa had offered 0.9 of a share of its stock for each Atlantic Coast share. Atlantic had repeatedly rejected Mesa’s offer, and the deal was under scrutiny by the U.S. Justice Department and District of Columbia antitrust regulators.
In temporarily blocking the takeover bid last week, a federal judge said Mesa’s deal with UAL could violate U.S. antitrust law because it potentially restrained Atlantic Air’s ability to launch a low-cost competitor to United.
Mesa Chief Executive Jonathan Ornstein said in a statement he disagrees with the court’s conclusions but understands ”United’s decision and appreciate their need to move forward with plans to maintain service in their Dulles hub without the service of Atlantic Coast Airlines.”
The regional route agreement between Mesa and UAL, which has reorganized under bankruptcy protection this year, was contingent on the Mesa-Atlantic deal being completed.
Mesa, which operates 975 flights a day, said it will focus growth plans on its current partnerships with United, US Airways and America West Holdings Corp.