Shares in Skywest, the Australian and South East Asia regional airline, rocketed after the firm announced that it has received an offer from Virgin Australia to acquire its entire issued share capital.

Virgin Australia plans to offer Skywest shareholders AUS$0.225 cash and 0.530 Virgin Australia shares for every one Skywest share. Based on Virgin Australia's closing price on October 29th, this equates to AUD$0.4688 per Skywest share.

The proposal is subject to the approval of the Securities Industry Council of Singapore (SIC) to the terms of the scheme of arrangement, as well as the approval of the Australian Competition and Consumer Commission, the Australian Foreign Investment Review Board and the Singapore High Court.

The approval of Skywest shareholders will be sought at an extraordinary general meeting.

Jeff Chatfield, Executive Chairman said: "Skywest is pleased to have received a proposal from Virgin Australia. The proposal, if approved by Skywest's shareholders, represents a substantial premium to Skywest's recent trading price and confirms the fundamental value of the Skywest business.

"The proposal will only proceed in the absence of a superior offer. Skywest will be appointing a Singaporean independent expert to advise the board on the value of the proposed consideration. Shareholders should be cautious in their dealings in Skywest shares and if in doubt consult their stockbroker.

"Based on our advice it is likely that this proposal will take some months to fully play out."

Shares in the company leapt 43.62% to 26.75p in opening trading.

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Skywest Airlines Ltd. (SKYW) share price