Business Irish

Tuesday 19 November 2019

IAG set for third Aer Lingus bid

Aer lingus
Aer lingus

Colm Kelpie

British Airways owner IAG could make another revised bid for Aer Lingus as early as this week, an analyst has forecast.

On Friday, IAG confirmed that Aer Lingus had rejected a second takeover approach that valued the carrier at €1.28bn. In a statement, the airline group headed up by Willie Walsh said a new indicative offer of €2.40 per share had been made on December 29, but had been thrown out.

But David Holohan of Merrion Stockbrokers predicted a third IAG approach wasn't far off.

"It could very well come this week," he told the Irish Independent. "The last offer came at the end of December, so there has been a decent window between then and now.

"Obviously with the trading update from Aer Lingus last week, IAG will be able to update their own internal model as to what they believe they airline could be worth.

"Given that they now have those figures, it is likely that a quick update from them could see the valuation for Aer Lingus revised higher and that could result in an updated bid coming quite quickly."

The 'Sunday Times' also reported yesterday that the future of IAG's bid could be determined this week, with contacts planned between the two companies and their advisors. Aer Lingus shares had soared 10.1pc by the close on Friday, valuing the airline at €1.33bn, amid speculation that a second takeover approach was on the cards. The announcement that a second approach had indeed occurred, and had been rejected, came after the markets closed on Friday evening, however.

Mr Holohan said he would expect the share price to fall back when markets open this morning, as the surge on Friday was on the back of heightened expectations of a second approach.

"But I do think as the day goes on and people digest the news over the weekend, I think the market will take the view that a further bid from IAG is likely, and that might help to stabilise the share price pretty close to where it was trading on Friday," he added.

Amid speculation that IAG would need to make a €3-per-share bid for the airline, Mr Honohan said a fresh bid could be in the region of €2.70. Before Christmas, the Aer Lingus board rejected an initial approach made by IAG that tabled a €2.30-per-share offer.

Irish Independent

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