Financier Carl C. Icahn's $450 million bid for Pan Am Corp. is being dismissed by most industry experts, but some think it may trigger a new round of bidding for the troubled airline.
The bid by Mr. Icahn, chairman of Pan Am competitor Trans World Airlines, would be activated only if Pan Am's existing $400 million deal with United Airlines falls apart. That deal, for Pan Am's London routes and other assets, is to be completed by midnight tomorrow.
Karen Firestone, airline analyst for Fidelity Investments in Boston, said an Icahn purchase of Pan Am is unlikely, but "everyone else is making an offer, so why shouldn't Icahn? He's a player."
Richard Fechtor, a Boston broker whose clients hold about two million Pan Am shares, said he would pass on the Icahn offer.
"The United deal is better than the Icahn deal," he said. But Mr. Fechtor added that the deal could trigger bidding by other parties to buy Pan Am.
Ray Neidl, analyst for Dillon Read in New York, said: "Pan Am has been looking for a foreign investor, so it isn't out of the question that there would be a capital infusion from a foreign carrier plus an agreement with United."
Ms. Firestone said Pan Am shouldn't abandon the United deal. "Pan Am has an offer from United, it's a real hard offer that increases the likelihood of their survival, and they ought to stick with it."
And that, said Pan Am spokeswoman Pamela Hanlon, is the airline's intent.
"We feel that the United deal is advantageous to the company, and our focus here is on completing the documentation by Wednesday," she said.
Ms. Hanlon said Mr. Icahn decided to make an offer after a phone conversation with Pan Am Chairman Thomas Plaskett, which followed the announcement last month of the Pan Am-United deal.
In that conversation, Ms. Hanlon said, Mr. Plaskett said the terms of the deal prohibited him from discussing the assets involved but added that anyone was free to make an offer for the whole airline.
That prompted the letter from Mr.Icahn to Mr. Plaskett, written Friday and released Sunday.
In the letter, Mr. Icahn offered to buy the company for $1 per share in cash and $2 per share in stock or notes. He also offered to buy the Pan Am shuttle and to put $100 million in "bridge" capital, to be spent during an ownership transition, into the airline.
Mr. Neidl said Mr. Icahn's bid for Pan Am is a serious one, made possible by the $1 billion in cash and investments that Mr. Icahn has parked in TWA.
But Mr. Neidl questioned whether any investor would want to acquire Pan Am, with its $1 billion in debt, $300 million in pension obligation, lack of financial assets or domestic routes and unionized work force.
Pan Am stock closed yesterday at $1.875, up 25 cents.