An Aer Lingus aircraft taking off from Dublin Airport in Ireland. Aer Lingus is examining a sweetened offer from the British Airways owner that values the Irish carrier at €1.36bn ($1.52bn).
Bloomberg/London
Aer Lingus Group showed signs of dropping its opposition to a takeover by IAG, saying it was examining a sweetened offer from the British Airways owner that values the Irish carrier at €1.36bn ($1.52bn).
The proposal of 2.55 euros a share includes a 5¢ cash dividend, Dublin-based Aer Lingus said in a statement, adding for the first time in the process that it’s “considering” a deal, which also requires the backing of Ryanair Holdings and the Irish government, the biggest existing shareholders.
Buying Aer Lingus would win IAG scarce take-off and landing positions at London Heathrow airport, Europe’s top hub, where British Airways is the No. 1 carrier, as well as opening up trans-Atlantic routes via Ireland. IAG, which bought BMI in 2011 to gain slots, has had two prior offers spurned by the board, forcing it to return with the sweetened proposal.
“The updated offer moves closer towards the endgame of Aer Lingus being acquired,” said David Holohan, an analyst at Merrion Capital in Dublin. “Ultimately, we believe that Ryanair and the government will be willing sellers at the current price or just north of it.”
Aer Lingus shares rose as much as 4.3% to €2.45 and were trading at 2.39 euros as of 9:37am in Dublin. The stock has risen 34% since December 17, the day before IAG’s first proposal was made public.
The Irish government will only back a deal if IAG gives reassurances on flights from regional airports, including Cork and Shannon, the Irish Independent reported yesterday. Transport Minister Paschal Donohoe said in an interview with state broadcaster RTE on Sunday that the government will consider issues such as maintaining the Aer Lingus slots at Heathrow.
IAG, led by former Aer Lingus pilot and chief executive officer Willie Walsh, was created in 2011 through a merger of British Airways and Iberia with the aim of consolidating other airlines as opportunities arose.
The company completed the purchase of Deutsche Lufthansa AG’s BMI unit — previously British Midland — a year later and added Spanish discounter Vueling in 2013. IAG confirmed separately that it had submitted an improved proposal, “subject to certain pre-conditions,” that did not guarantee an offer.
“The board is considering the revised proposal,” Aer Lingus said in the statement. “There can be no certainty that any offer will be made nor as to the terms of any offer.”
A purchase might ramp up competition with Ryanair, the largest Aer Lingus shareholder with a 30% stake.
Ryanair gained the holding after trying itself to buy Aer Lingus several times, a plan blocked by regulators on each occasion, and has indicated it’s prepared to sell at the right price The Irish government owns about 25% of Aer Lingus.
Under outgoing CEO Christoph Mueller, Aer Lingus has cut costs, streamlined its short-haul business and targeted a bigger share of the trans-Atlantic market. Mueller will become chief at Malaysian Airlines in March, taking over at a carrier that suffered the loss of two 777 wide-body aircraft last year.
