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A federal judge Nov. 16 gave the Department of Justice until Nov. 27 to review Continental Airlines Inc.’s plan to repurchase 6.7 million shares from Northwest Airlines Inc. for $450 million to resolve an antitrust dispute. Under the 168-page agreement unveiled Thursday, Northwest would retain about 5 percent of Continental’s Class B shares and would gain the right to reject a takeover of the Houston-based carrier. The companies also would extend a marketing alliance through 2025. The terms are very similar to a preliminary deal announced Nov. 6. A Justice Department spokeswoman said it was premature to endorse the final agreement, saying government lawyers plan to carefully scrutinize the document. The Justice Department on Nov. 6 lauded the preliminary deal, calling it a “victory for consumers” because it ensures Continental and Northwest remain independent competitors. The Justice Department sued the carriers in October 1998 after Northwest acquired more than 50 percent of Continental’s voting stock. It charged Continental would be a less aggressive competitor if another carrier possessed such a large share of voting stock. Continental cooperated with the government, but Northwest decided to litigate. A trial began Nov. 1 in Detroit before U.S. District Judge Denise Page Hood, who put the case on hold last week after Northwest made the settlement offer. Northwest Chief Executive Officer John Dasburg said in a prepared statement that the agreement meets the airline’s goal of securing a long-term alliance with Continental. “We believe our customers will benefit from a fourth strong U.S. airline network that provides superior customer service and a network that takes them where they want to go,” he said. Besides selling 6.7 million shares, Northwest will swap 1.975 million of Continental Class A shares for 2.6 million Class B shares, which have weaker voting rights. Continental also will get one share of a new preferred stock, giving it the power to block an acquisition or liquidation of Continental. This includes the sale of Continental’s transAtlantic and Latin American routes. Northwest loses the preferred stock if it is taken over or if the marketing alliance between the two carriers is terminated. The parties expect to the close the transactions in two months. Copyright (c)2000 TDD, LLC. All rights reserved.

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