Ryanair tabled €1.30 per Aer Lingus share last summer to buy its rival in a deal that would value the smaller carrier at €694m. Ryanair already owns close to 30pc of Aer Lingus. The Government has already said it won't sell its 25.1pc holding in Aer Lingus to Ryanair.
But shares in Aer Lingus closed up more than 5.7pc yesterday in Dublin at €1.37, giving the airline a market capitalisation of €726m.
Having released strong full-year results this week, Aer Lingus is in good financial shape. Investors clearly believe that Ryanair has undervalued the business.
Aer Lingus chief executive Christoph Mueller also said this week that the bid undervalues the carrier. He and his board have already rejected the latest approach, which was made last summer.
That offer has lapsed under takeover rules as the European Commission considers whether or not to sanction a takeover of Aer Lingus. But Mr O'Leary has already said that if Ryanair makes a fresh offer for Aer Lingus, pending approval from the EU, that the new offer will not exceed the €1.30 per share already tabled.
"We believe that Ryanair's offer of €1.30 now offers Aer Lingus' long-suffering shareholders a real and meaningful return," Mr O'Leary said last summer as he launched the third bid for Aer Lingus.
Aer Lingus floated its shares on the stock market in 2006 at €2.20. In its first bid that year, Ryanair offered €2.80 per share. The second Ryanair bid, in 2008, valued Aer Lingus at €748m based on an offer of €1.40 per share.
Ryanair has proposed what Mr O'Leary has described as a "radical" remedy package to the European Commission in an effort to persuade competition regulators to allow a takeover.