Aer Lingus mulls BA parent IAG's sweetened offer
27 January 2015
Irish flag carrier Aer Lingus is mulling a third takeover bid from International Airlines Group (IAG), the owner of British Airways and Spain's Iberia, offering €2.55 per share or €1.36 billion for the low-cost airlines.
In a brief filing with the stock exchange yesterday, Aer Lingus confirmed that it had received a revised offer and the airline's board is considering the proposal.
The new bid comprises cash offer of €2.5 per share and a cash dividend of 5 cents per share and it was conditional on the recommendation of the board and acceptance by its biggest two shareholders Ryan Air, Europe's second-largest airline after Lufthansa group, and the government of Ireland.
The latest offer of €2.5 a share is about 4 per cent higher than IAG's previous offer of €2.4 a share. IAG's first offer over a month ago was €2.3 a share for Aer Lingus.
Dublin-based Ryan Air holds nearly 30-per cent stake in Aer Lingus while the Irish Government owns 25-per cent.
In an interview with Irish national television channel RTE, the transport minister Paschal Donohoe said the government will look at the offer in terms of value and potential impact on the country's links with the rest of the world.
''I and the Government will take huge care in evaluating any proposal that comes in,'' Donohoe said.
The key issues will be retaining Aer Lingus' landing slots at London's Heathrow airport and potential job losses.
According to trade unions, about 1,000-1,200 jobs will be at risk if the deal goes through.
The minister is expected to brief the cabinet on IAG's new offer on Tuesday.
Aer Lingus is the fourth-busiest operator from Heathrow after British Airways, Lufthansa and Virgin Atlantic.
The government's main opposition Fianna Fail called for blocking the deal using the government's stake in the airline, as it would ''siphon off'' Aer Lingus' landing slots in Heathrow airport and threaten business and tourist links and cost significant job cuts in Dublin, Cork and Shannon airports.
It is believed that the airlines' board would accept the latest offer and recommend it to the company's shareholders, as an immediate rejection of the proposal has not come.
Aer Lingus will have to decide whether it would continue as a smaller European airline or become part of a bigger group in the highly competitive airline industry.
IAG, formed in 2009 through the merger of British Airways and Spanish carrier Iberia, is expected to propose a detailed plan about the future of Aer Lingus, including its slots at Heathrow.
A final decision in favour or against the deal has to come from the Irish government.
Earlier, Ryan Air had made several unsuccessful attempts to take over the low-cost carrier. However, its efforts were thwarted by European competition authorities on the grounds of the offer terms.
According to analysts, a deal between IAG and Aer Lingus would be beneficial to both the sides.
IAG chief executive Willie Wash, the former head of Aer Lingus during 2001-2005, counts on additional Heathrow landing slots and improving the group's operational efficiency through the acquisition.
Under its chief executive Christoph Muller, Aer Lingus reported a strong operating profit of €112.9 million in the September quarter registering a 19-per cent jump over last year. During the period, the airline carried nearly a quarter more long-haul passengers than a year ago.