Ryanair 'can't be trusted' to sell Aer Lingus stake
Ryanair shouldn't be allowed to oversee the sale of its near 30pc stake in Aer Lingus because it might otherwise sell it to "allies" who might later be persuaded to accept a fresh takeover offer for its smaller rival, Aer Lingus has argued.
Aer Lingus has told the UK's Competition Commission in fresh submissions that in the event the watchdog orders Ryanair to sell all of its holding in the former state-owned airline, a third-party independent trustee should be appointed to control the sale.
The commission is deciding whether Ryanair should be forced to sell its 29.8pc Aer Lingus stake after the watchdog determined in May that it exerts material influence over its smaller competitor.
Ryanair says the commission has based its finding on "spurious theories" and that it is "flawed and unsustainable".
Aer Lingus has argued that a divestiture of Ryanair's stake should be undertaken by a trustee "in cooperation with Aer Lingus management and in isolation from Ryanair" to create a broader shareholder base.
Aer Lingus has also insisted that it does not need a strategic partner. Abu Dhabi-based Etihad owns almost 3pc of Aer Lingus and has previously expressed an interest in boosting its stake in the airline.
"Aer Lingus does not presently seek a new strategic investor, and it should not be the outcome of this process that it be obliged to take one," it has told the commission.
It argues that its own "strategic thinking" or "other market forces" should determine any significant new strategic shareholder, if such a desire arose, and not Ryanair. "Ryanair should have no right to play a role in building this new and diversified shareholder base, any more than it should in identifying a hypothetical individual buyer," Aer Lingus insists.
"Ryanair might contrive to place its shares with its allies; with its own shareholders (who might be predisposed to accept a further hostile offer); with short-termist arbitrageurs; or with private equity interests employing a leveraged structure," it claims.
Aer Lingus has told the commission that its investment banking advisers have told it that an institutional placing of a near 30pc share of the airline could be "readily undertaken" without the need to resort to a formal secondary public offering through the stock exchange.
Aer Lingus has told the commission that Ryanair should have "no part" in any related investor roadshows and "should be constrained from undermining the exercise".