Ryanair backs IAG's Aer Lingus takeover
Ireland's low-cost carrier Ryanair on Friday finally accepted International Airlines Group's bid for its near 30 percent stake in Irish ival Aer Lingus, clearing the way for end of a drawnout takeover.
IAG, parent of British Airways and Iberia, had made a takeover bid valuing Aer Lingus at 1.4 billion euros ($1.5 billion) that had been fiercely rejected by Ryanair.
It was unclear why the airline had suddenly changed its mind, especially since the offer has not been revised higher.
"The board of Ryanair Holdings plc today confirmed that it has voted unanimously to accept the IAG offer for Ryanair's 29.8 percent shareholding in Aer Lingus Group plc," said a statement from Ryanair, which is the largest single Aer Lingus shareholder.
"The board believes that the current IAG offer maximises Ryanair shareholder value."
An IAG spokeswoman told AFP that the group welcomed Ryanair's statement.
Ryanair was left as kingmaker in the deal after the offer was accepted by the Aer Lingus board and given the green light by the Irish government, owner of 25 percent of the company, in May.
"We believe the IAG offer for Aer Lingus is a reasonable one in the current market and we plan to accept it, in the best interests of Ryanair shareholders," said Ryanair chief executive Michael O'Leary.
"The price means that Ryanair will make a small profit on its investment in Aer Lingus over the past nine years."
Only last month, Ryanair said it would appeal a "ridiculous" ruling by British regulators to cut its stake in Irish rival carrier and takeover target Aer Lingus on grounds of competition.
Ryanair said it would appeal in light of the fact that British Airways' parent comapny IAG had tabled an offer for Aer Lingus.
The deal offers Aer Lingus shareholders 2.55 euros per share -- comprising 2.50 euros plus a 0.05 euro cash dividend.
Irish transport minister Paschal Donohoe also welcomed Ryanair's decision.
"Minister Donohoe notes and welcomes the decision by Ryanair to accept IAG's offer for its stake in Aer Lingus," read a brief statement from Dublin's transport ministry.
Ryanair itself had previously launched three unsuccessful takeover attempts for Aer Lingus.
In order to quell opposition to its Aer Lingus takeover, IAG has agreed to maintain the brand, sustain its existing routes, create new jobs and ensure the airline's lucrative landing slots at London's Heathrow airport would not be sold for seven years.
- Strategic move -
At the same time, IAG is seeking to take advantage of Aer Lingus' key transatlantic routes and grab global market share, analysts say.
Irish trade unions remain fearful about potential job losses and deteriorating working conditions after restructuring, saying they would oppose the sale if their concerns were not addressed.
However, IAG plans to create up to 635 new net jobs would be created at Aer Lingus by 2020.
Following the long-awaited Ryanair deal, IAG's Aer Lingus stake will now climb beyond the crucial 50-percent level.
"It was the main uncertainty that surrounded the IAG approach," Merrion Stockbrokers analyst David Holohan told AFP.
"We were quite sure a lot of the other institutional holders would support it, but Ryanair being the largest shareholder was important for its success."
The transaction remains subject to regulatory approval from the European Commission.
"EU regulators have raised a number of issues with IAG which IAG have since sought to address, particularly with regard to access to North American routes through IAG's network versus some of its peers," added Holohan.
"A lot of remedies that they have put forward, I think, will be enough to insure that EU approves the deal."
In early afternoon London deals, IAG's share price flew 2.53 percent higher to 527.50 pence, while Ryanair stock also gained more than two percent in Dublin.
© 2015 AFP