UPDATE 2-LAN-TAM merger would create new LatAm airline giant

* Brazil’s TAM, Chile’s LAN unveil plans to merge

* Deal would create biggest airline in Latin America
(Adds details of transaction, updates share prices)

SAO PAULO, Aug 13 (BestGrowthStock) – Brazil’s largest airline TAM
Linhas Aereas (TAMM4.SA: )(TAM.N: ) plans to merge with Chilean
rival LAN (LAN.SN: )(LFL.N: ), a deal that would create the biggest
carrier in Latin America.

The merger would create a new regional powerhouse to help
meet booming demand for air travel in Latin America. The
combined company would fly to 115 destinations in 23 countries
and employ some 40,000 workers, TAM said.

TAM said in a regulatory filing on Friday the new entity,
to be named Latam Airlines Group, would be created via an
all-stock transaction that may include a share swap. The
financial terms were not disclosed.

LAN also confirmed the agreement, which it said was
non-binding.

LAN’s Chief Executive Enrique Cueto will be the CEO of
Latam Airlines, while TAM’s deputy chairman Mauricio Rolim will
be the chairman of the combined company. The airlines’ brands
will be kept separate, the statement said.

As part of the agreement, TAM said its shareholders will
receive 0.9 shares of LAN for every TAM share in the form of
Brazilian depositary receipts. TAM said it would then delist
its shares in Sao Paulo and in New York.

TAM’s controlling shareholders, Tam Empreendimentos e
Participacoes, will retain control of the Brazilian company
with an 80 percent voting stake and will also own an
undisclosed stake in LAN, the filing said.

LAN’s controlling shareholders, Costa Verde Aeronautica SA
and Inversiones Mineras del Cantabrico will also retain control
of the Chilean airline, TAM said.

TAM shares rose 27.6 percent to close at 36.20 reais in Sao
Paulo. LAN rose 7.7 percent to 13,900 Chilean pesos in
Santiago.

LAN is a member of the Oneworld alliance of airlines, which
also has American Airlines (AMR.N: ), Mexicana and British
Airways among its members. TAM is a member of Star Alliance.
(Reporting by Guillermo Parra-Bernal and Elzio Barreto,
Writing by Brian Winter. Editing by Robert MacMillan)

UPDATE 2-LAN-TAM merger would create new LatAm airline giant