The $6.5 billion merger of UAL Corp.’s United Air Lines and Continental Airlines involved some of the biggest names in corporate deal making, but one stood out: James (Jimmy) Lee Jr.
Lee, a vice chairman and veteran financier and merger adviser at JPMorgan Chase & Co., knew the deal inside out — and rightly so, given that he had negotiated an almost identical transaction for UAL chief executive Glenn Tilton in 2008.
Tilton, a fan of consolidation, had started conversations with a handful of fellow airline CEOs back in 2006. Continental looked like the ideal merger partner, and Lee and Tilton negotiated a deal only to have Continental CEO Lawrence Kellner and his board pull out on the eve of the announcement.
In 2009, when Kellner’s successor, Jeffery Smisek, got wind that Tilton — again advised by Lee — was talking to US Airways Group, he called the UAL boss and suggested that the two of them sit down together. Lee says the deal they hammered out is virtually the same as the proposed transaction of 2008.
Lee, 57, ran a heavyweight JPMorgan team that included Thomas Miles, a managing director who left to join Morgan Stanley in July; Christopher Ventresca, co-head of North American M&A; and David Fox, head of Midwestern investment banking. He struck a good deal for Tilton: The owners of United parent UAL would hold 55 percent of the combined company, with Continental shareholders taking the rest. The latter got 1.05 UAL shares in exchange for each one of theirs. The combined entity formed the world’s largest carrier by revenues, leapfrogging Delta Air Lines.
Tilton also took counsel from Goldman Sachs’s Michael Carr, a senior member of the firm’s merger leadership group. Both banks were on par in terms of advice, but JPMorgan enjoyed a deeper relationship because it has long been a lender to UAL. Morgan Stanley M&A chief Robert Kindler worked with Continental alongside Lazard managing director Harry Pinson.
