Thursday 14 November 2019

Aer Lingus to be sold for €1.4bn

Board recommending higher offer of €2.55 per share from IAG including cash dividend

Aer Lingus emblem
Aer Lingus emblem

Ailish O'Hora and John Mulligan

AER Lingus is expected to be sold for €1.4bn after the board of the company said it’s willing to recommend a higher takeover bid by IAG, the owner of British Airways.

The sale will have to be agreed by shareholders and will also need regulatory approval.

The airline said today it was accepting a higher offer of €2.55 per share including a cash dividend following a number of attempts by IAG to buy Aer Lingus.

The offer is the third from International Consolidated Airlines Group in six weeks, and is worth €2.55 per share, up from €2.40, and includes a cash offer of €2.50 per share and a dividend of €0.05.

IAG is headed by former Aer Lingus boss Willie Walsh. He started off as an Aer Lingus pilot before eventually running the airline, and is also chairman of Ireland's debt agency.

The main shareholders in Aer Lingus include the Government, with a 25.1pc stake, and Ryanair, which owns 29.8pc. Both have the power to block any deal.

"Having considered this request, the Board has indicated to IAG that the financial terms are at a level at which it would be willing to recommend, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties," Aer Lingus said in a statement.

"The Board notes IAG's intentions regarding the future of the company, in particular that Aer Lingus would operate as a separate business with its own brand, management and operations, continuing to provide connectivity to Ireland, while benefitting from the scale of being part of the larger IAG group."

Shares in Aer Lingus were 1.2 percent higher at €2.40 at 0810 GMT. IAG rose 2.4pc to 562p in early trade, the highest level since the group was formed four years ago.

Ryanair chief marketing officer Kenny Jacobs told the Irish Independent this morning that the airline “isn’t bothered” by the formal offer having been made by IAG for Aer Lingus.

He said that any decision Ryanair will take regarding a sale of its 29.8pc stake in Aer Lingus will have to wait until there has been direct communication to it regarding the formal offer.

Amid warnings from unions that jobs could be lost and concerns that air connections will vanish if a takeover deal is struck, Transport Minister Paschal Donohoe earlier said that he would “very, very carefully” evaluate a potential sale.

 SIPTU President Jack O'Connor said today the sale would have big implications for workers and he added that they need to be protected.

David Holohan of Merrion Stockbrokers said the assurances offered by IAG should assuage many of the government's concerns.

"IAG has outlined plans for Aer Lingus which we believe are logical, attractive and will likely alleviate the concerns of the Irish government. Our view is that this news paves the way for the Irish government to support the deal," Holohan said.

Senior executives at Aer Lingus will earn about €30m from their bonus share scheme i from the sale.

(Additional reporting Reuters)

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