Lufthansa to acquire British Midland Airways
23 June 2009
Deutsche Lufthansa AG, Europe's second-biggest airline has finally reached a settlement with Sir Michael Bishop, the co-founder of BMI (British Midland Airways Ltd.) over a put option he is holding, to acquire the airline in stages bringing an end to the row that has been persisting for several months, Lufthansa said in a press release yesterday.
Lufthansa already owns 30 per cent minus one share stake in BMI. As per the deal, the German carrier will pay Bishop and his holding company £223 million (Rs1,771 crores) for additional 50 per cent plus one share stake. Bishop will be paid a compensation of £175 million for canceling the put option and the remaining £48 million will be paid for buying the shares.
The shares will acquired through Lufthansa-related holding company, LHBD Holding Ltd, from Bishop's holding company BBW Partnership Ltd.
Initially the German carrier will own 35 per cent stake in the UK-based LHBD and plans to acquire 100 per cent stake after obtaining the necessary traffic rights for BMI.
It is believed that Lufthansa is in discussions with Scandinavian Airlines (SAS), holder of the remaining 20 per cent stake in BMI for a possible acquisition.
The deal comes at a time when the airline industry is facing a severe slump due to the fall in passenger traffic and cargo movement as a result of the global slowdown.