Continental Airlines and United Airlines are expected to announce Monday they are merging to form the world's largest airline. Continental Airlines Inc and UAL Corp's United Airlines have ironed out the last remaining wrinkle in their merger talks, paving the way for a deal that would create the world's largest carrier, two sources familiar with the matter said Friday. The combination would leapfrog over Delta Air Lines Inc. as the biggest airline by passengers carried. The airlines have agreed to an exchange ratio of 1.05 UAL shares for each Continental share in all-stock deal yet to be approved by the companies' boards, the sources said. Based on United's stock price of $21.83 on Friday afternoon, and Continental's 139.6 million outstanding shares as of April 21, United would pay $3.2 billion for Continental. That value would be determined by the market, and could change quite a bit by the time the deal closed and the shares were exchanged. Based on current shares outstanding, a combined company would have 314.5 million shares, and UAL shareholders would own roughly 53 percent of the new company. United's board will meet Friday, while Continental's board will hold meetings on Friday and Sunday to discuss the deal, the sources said. Under the terms being discussed for the all-stock merger, UAL Chief Executive Glen Tilton would become non-executive chairman of the combined carrier while Continental CEO Jeff Smisek would become chief executive.
