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Piñera leads the way: LatAm (merger airlines LAN + TAM) shows new strategic partnership between Chile and Brazil, new big mergers in line.

Chilean President Sebastian Pinera is the architect behind the merger of Lan Chuile and the brazilian airline TAP.AFP PHOTO / RODRIGO BUENDIA (Photo credit should read RODRIGO BUENDIA/AFP/Getty Images)

SANTIAGO – A merger between Brazil’s TAM and Chile’s LAN airlines would generate synergies likely to add some $3 billion in value to the new group, LAN’s chief executive was quoted as saying by a local paper on Saturday, reported the news agency Reuters on Saturday.

Both companies announced on Friday a proposed merger via a $2.7 billion all-stock transaction, which would create Latin America’s top carrier and the No. 11 in the world in terms of passengers carried.

LAN (LAN.SN) (LFL.N) CEO Enrique Cueto told Santiago-based La Tercera daily the merger is crucial for his carrier to compete in a more consolidated global airline industry, break into the booming Brazilian market and generate important savings.

If the merger is approved Cueto will be the CEO of the new LATAM Airlines Group while TAM’s (TAMM4.SA) (TAM.N) deputy chairman, Mauricio Rolim, will be the chairman.

“We believe that the $400 million in annual synergies has an additional value of $3 billion that in time will be reflected in our results,” Cueto said. “If you take the current price, without synergies, its (combined airline) value is around $11.5 billion.”

TAM’s Amaro family and LAN’s Cueto, both of which control their respective airlines, will jointly own a 37-38 percent stake in the combined carrier, said Cueto. His brother Ignacio, LAN’s chief operating officer, said in that same interview that the Cueto family will have a 24-25 percent stake.

The deal will allow both carriers to keep flying with their own brands under the control of a holding company. The structure seems designed to portray a merger of equals that could help it clear potential legal and political hurdles in both countries. Brazilian regulations forbid foreigners from…READ MORE HERE.