Business Irish

Tuesday 20 February 2018

Share buying was to foil Ryanair bid, says O'Brien

Businessman claims Aer Lingus undervalued

John Mulligan

John Mulligan

Businessman Denis O'Brien said he invested in Aer Lingus to thwart Ryanair's ambition to take over the carrier as he didn't want investors in Ireland to be flown by the discount airline.

"I didn't think it was a great idea for Ryanair to be flying foreign direct investors into Ireland," Mr O'Brien said in an interview with Bloomberg Television.

"Most people when they come to invest in Ireland they have a strong impression when they fly on Aer Lingus that this is a good country to invest in."

Mr O'Brien said he had been adding to his stake in the former national carrier and now has 3.6pc to 3.8pc.

There are "severe" regulatory hurdles facing Ryanair's proposed €694m bid for Dublin-based Aer Lingus, Mr O'Brien said.

"It is all undervalued, and it's all a game," he added.

The businessman first bought shares in Aer Lingus in October 2006. He paid €25.3m for a 1.6pc holding and then quickly bought a further 0.5pc of the firm. He later increased his holding to its current level.

He claimed in 2006 that a Ryanair takeover of Aer Lingus would be a "disaster".

Transport Minister Leo Varadkar said yesterday that he believed the offer undervalues Aer Lingus and that he would not be able to recommend a bid to his cabinet members until it was determined if the bid would breach antitrust legislation.

"There's a very big outstanding issue there as to the competition law and obviously I wouldn't be able to recommend to my colleagues that we make any firm decision until it's been clarified as to whether we could consider this offer as being legal or not," Mr Varadkar said.

The Aer Lingus board has already told its shareholders they should reject any offer at €1.30 per share and also questioned whether a bid could even be successfully completed.

It has said that because the UK Competition Commission has just launched an investigation into Ryanair's current 29.8pc holding in Aer Lingus, it believes Ryanair is now under a "legal prohibition" from undertaking any further integration with Aer Lingus without the consent of the Competition Commission.

The London office of US-founded law firm Clery Gottlieb Steen & Hamilton is advising Ryanair on competition aspects related to its new bid for Aer Lingus. The chairman of Dublin law firm Arthur Cox, Eugene McCague, is advising Aer Lingus on the corporate elements of the Ryanair bid.


Ryanair has 28 days from last Tuesday to file a formal offer. There was no indication yesterday as to when the airline will do so.

Shares in Aer Lingus declined yesterday as the market bet that Ryanair won't be able to complete a takeover, even if Aer Lingus shareholders agreed to it.

Competition lawyers believe it is unlikely that the European Commission -- which blocked Ryanair's 2006 tilt at Aer Lingus -- would be disposed to changing its opinion on a merger between the two airlines.

Meanwhile, Aer Lingus has confirmed that it is in talks with George Best Belfast City Airport. The airline is believed to be planning to switch its operations from Belfast International Airport to Belfast City.

A spokesman said: "We are engaged in a confidential process with both airports which is not complete yet." (Additional reporting Bloomberg

Irish Independent

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