Wednesday 7 December 2016

No Etihad approach for Aer Lingus as market awaits higher IAG offer

Published 20/12/2014 | 02:30

Aer lingus
Aer lingus

Gulf airline Etihad has not made any counter approach to boost its stake in Aer Lingus as the Irish airline is targeted in a €1bn buyout plan by British Airways owner IAG, the Irish Independent understands.

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Etihad, based in Abu Dhabi, owns just under 5pc of Aer Lingus. Etihad's chief executive, James Hogan, has frequently said that he would be interested in increasing that stake.

But he also said this week that Etihad is not pursuing any new takeovers in the short-term.

"We certainly have no acquisitions on the radar, it's about consolidating what we have," he said on Thursday. Under EU rules, Etihad couldn't buy more than 49pc of Aer Lingus.

While there's been speculation that Etihad may have made an approach to counter IAG's surprise approach to buy Aer Lingus this week, it's believed that no such move has been made.

That leaves Aer Lingus waiting to see if IAG, which is headed by former Aer Lingus pilot and chief executive Willie Walsh, will return with an increased indicative offer.

It's almost certain to do so. UK-based activist investor Crystal Amber, which owns 2.8pc of Aer Lingus, said it would welcome a second, higher proposal.

Analyst Stephen Furlong at Davy Stockbrokers said an offer of €2.50 per Aer Lingus share, which would value the company at €1.33bn, would be feasible. The shares closed at €1.98 yesterday.

The Aer Lingus board, headed by chairman Colm Barrington, rejected the IAG approach, insisting it "fundamentally undervalues" Aer Lingus.

Last week, Mr Barrington had expected that Aer Lingus might have been in a position by the end of this month to announce a new chief executive to replace Christoph Mueller, who'll leave next year to head Malaysia Airlines.

However, yesterday Mr Barrington told the Irish Independent he's not now as certain that the appointment will be announced this month, but that it remains a possibility. He would not comment on the takeover approach.

Any attempt by Etihad to increase its shareholding in Aer Lingus would have to involve it talking to either Ryanair, which owns just under 30pc of Aer Lingus, or the Government, which owns 25.1pc.

The UK Court of Appeal had expected to rule by yesterday on whether Ryanair could retain its stake in Aer Lingus after it was ordered to cut it to no more than 5pc by a competition watchdog.

However, the appeal ruling won't now be made public until January.

Walsh will bow out of NewEra Aer Lingus talks

IAG chief executive Willie Walsh, who's just been appointed non-executive chairman of the National Treasury Management Agency (NTMA) by Finance Minister Michael Noonan, will not take part in any discussions in relation to Aer Lingus at the agency.

The NTMA oversees NewEra, the body which manages the State's stakes in companies such as Aer Lingus and semi-state businesses.

"Mr Walsh will be declaring an interest in Aer Lingus," said an NTMA spokesman. "Should any matter arise in relation to Aer Lingus, he will absent himself from any discussions in relation to same and will receive no papers on the matter."

 

Irish Independent

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