Tuesday 21 October 2014

Aer Lingus: O'Brien's ?43m bid to stop O'Leary

Tom McEnaney

Published 18/10/2006 | 00:11

BILLIONAIRE businessman Denis O'Brien dramatically entered the Aer Lingus takeover battle yesterday after buying ?43m worth of shares in the airline. He said the purchase of 2.1pc of the company was meant to signal his opposition to the bid by Michael O'Leary's Ryanair.

BILLIONAIRE businessman Denis O'Brien dramatically entered the Aer Lingus takeover battle yesterday after buying ?43m worth of shares in the airline.

He said the purchase of 2.1pc of the company was meant to signal his opposition to the bid by Michael O'Leary's Ryanair.

Industry sources said Mr O'Brien's opposition to Ryanair stems from a newspaper advertisement in which the low-cost carrier lampooned the billionaire businessman.

Shortly after it emerged that Mr O'Brien was moving to Malta for tax purposes, Ryanair began services to the island and offered customers free flights. The newspaper ad used Mr O'Brien's photograph with the tag line: "All you pay is taxes."

It is understood that even before the Malta advert, there was no love lost between Mr O'Leary and Mr O'Brien.

Both men served their business apprenticeships as personal assistants to billionaire businessman Tony Ryan when he was head of the aircraft leasing firm GPA. Mr Ryan went on to found Ryanair.

Mr O'Brien has not let his aviation experience go to waste. He is a substantial shareholder in Aergo Capital, a leasing firm which specialises in older aircraft, specifically Boeing MD 80s and 737-200s.

In a statement yesterday, a spokesman said Mr O'Brien bought the shares in Aer Lingus because "he believes in competition".

In the past few weeks, Mr O'Brien has been a vocal opponent of the Ryanair bid, calling it a "disaster" for the country.

The financier, who entered the realms of the super rich when he won Ireland's second mobile phone licence, advised Aer Lingus employees to buy up to 4pc of the company almost two weeks ago. "Then it would all be over," he said at the time.

Mr O'Brien has built up his stake in two tranches. He bought 8.6m shares at ?2.95 each yesterday to give him 1.6pc of the company. The remainder was bought at an unknown price. The shares finished trading yesterday down 1c at ?2.87, reflecting the market's view that Mr O'Brien's intervention leaves it less likely the Ryanair bid will succeed.

Aer Lingus pilots were also in the market yesterday.

They used ?870,000 from their pension fund to bring their stake to 2.24pc.

But their move has prompted the intervention of the Irish Pensions Board (IPB).

Regulations require that funds can only be used to better the eventual pensions of the members.

Ann Maher, chief executive of the IPB, said: "We have raised the matter with the trustees of the pilots' pension fund and now we are monitoring the position in our regulatory capacity."

Losses

In the event the Ryanair bid for Aer Lingus is unsuccessful, the share price is likely to suffer a significant fall.

And that would leave both Mr O'Brien and the pilots nursing substantial losses.

Shortly after the Government privatised Aer Lingus in a ?2.20-per share flotation, Ryanair swooped to buy 19.2pc of the stock and made a ?2.80-per share offer.

That valued the carrier at almost ?1.5bn, or ?0.4bn more than the original Government price a few weeks earlier.

The Government has 28.3pc of the company while employees have up to 15pc. The rest is owned by institutional shareholders who have driven up the share price in the expectation that Ryanair will make an increased offer.

Mr O'Brien made ?250m from his sale of the second mobile phone licence. He has subsequently invested in dozens of businesses and is the majority shareholder in Digicel, a Caribbean mobile phone business worth about ?2bn.

The awarding of that licence by the then Fine Gael minister Michael Lowry is one of the matters being investigated by the Moriarty Tribunal.

Specifically the tribunal is investigating allegations that there are financial links between Mr O'Brien and the disgraced former minister.

Ryanair will today announce at least two new routes out of Dublin, including one to Stockholm.

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