Friday 24 May 2019

Aer Lingus rejects second takeover offer from BA owner

Airline's shares soared 10.1pc earlier

Willie Walsh, Chief Executive of International Airlines Group. Photo: Conor McCabe
Willie Walsh, Chief Executive of International Airlines Group. Photo: Conor McCabe
John Mulligan

John Mulligan

Aer Lingus has rejected a second takeover approach from British Airways' owner IAG that valued the Irish carrier at €1.28bn.

Aer Lingus shares soared 10.1pc to €2.50 yesterday, valuing the airline at €1.33bn.

IAG issued a statement after stock markets closed yesterday evening, confirming that a new indicative offer to buy Aer Lingus for €2.40 per share was made on December 29 and was subject to certain pre-conditions. It also said that the revised proposal has been rejected by the Aer Lingus board.

Before Christmas, the Aer Lingus board, headed by chairman Colm Barrington, rejected an inital approach made by IAG that tabled a €2.30 per share offer for the Irish carrier.

The board said the indictive offer had undervalued the airline and its prospects.

Aer Lingus declined to comment last night.

The latest offer values the Government's 25.1pc stake in Aer Lingus at €321m. The offer values Ryanair's 29.8pc holding in Aer Lingus at €381m.

That's not far off the €407m that Ryanair spent in total since 2006 accumulating its stake in its smaller rival.

There had ben speculation yesterday that IAG could be prepared to make an indicative offer of between €2.70 and €2.85 per Aer Lingus share.

Aer Lingus owns about 23 valuable takeoff and landing slots at a heavily congested Heathrow Airport, where British Airways is the biggest operator. Buying Aer Lingus and having access to those slots would be highly advantageous to IAG.

However, for a bid to be successful, IAG would have to probably sell some Aer Lingus Heathrow slots to ease competition fears, while the Government would also want assurances about sustained connectivity between Dublin and Heathrow - one of the busiest international routes in the world.

Ryanair is almost certain to be forced to cut its stake in Aer Lingus to no more than 5pc after being told to do so by the UK competition watchdog.

Ryanair appealed that decision and the ruling could be made public next week. It's unlikely to be successful in reversing the decision.

IAG chief executive Willie Walsh was in Dublin yesterday to speak at a leadership conference, the Pendulum Summit.

"We believe consolidation within the airline industry will be a positive," Mr Walsh told the audience, without directly referencing Aer Lingus, where he was once a pilot and chief executive.

"Our vision is to be the leading international airline," Mr Walsh added, pointing out that IAG wanted to be a "multinational, multi-brand" business.

"The real value that we have comes from the value that our brands create," he said.

Aer Lingus is being advised on its takeover approach by Goldman Sachs, while IAG is being advised by Deutsche Bank and Goodbody Stockbrokers. Barclays is its corporate broker.

Irish Independent

Also in Business