Aer Lingus backs IAG's 1.35-bn-euro takeover offer

27th January 2015, Comments 0 comments

Irish carrier Aer Lingus on Tuesday backed a 1.35-billion-euro ($1.51-billion) takeover bid from International Airlines Group, parent of British Airways and Iberia, in a deal aimed at slashing costs.

Aer Lingus announced in a statement that its board was "willing to recommend" IAG's improved proposal -- its third since December -- subject to certain conditions.

The Dublin-based airline announced the news one day after revealing IAG had submitted a sweetened proposal worth 2.55 euros per share, comprising 2.50 euros in cash and a dividend of 0.05 euros per share.

The deal now hinges on its major shareholders Ryanair and the Irish government.

"The revised proposal remains conditional on, amongst other things, confirmatory due diligence, the recommendation of the board of Aer Lingus and the receipt of irrevocable commitments from Ryanair Limited and the Minister for Finance of Ireland to accept the offer," Aer Lingus said in the statement.

"IAG has indicated that it would only proceed with its third proposal with an indication from the board of Aer Lingus that it would be willing to recommend the financial terms of the revised proposal.

"Having considered this request, the board has indicated to IAG that the financial terms are at a level at which it would be willing to recommend, subject to being satisfied with the manner in which IAG proposes to address the interests of relevant parties."

In a separate statement, London-listed IAG declared it would operate Aer Lingus as a separate business, with its own brand, management and operations, should the takeover go ahead.

- Significant benefits -

"IAG believes that the proposal would secure and strengthen Aer Lingus's brand and long term future within a successful and profitable European airline group, offering significant benefits to both Aer Lingus and its customers," the company said.

The deal would also allow Aer Lingus to benefit from "the scale of being part of the larger IAG group".

It added: "IAG recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Irish government in order to secure its support for the transaction."

The company wants Aer Lingus to join the oneworld airline alliance -- which includes British Airways and Iberia -- and become part of a joint business that IAG operates over the North Atlantic with American Airlines.

Aer Lingus had already snubbed two previous takeover offers from IAG, pitched at 2.30 euros and 2.40 euros a share.

Irish low-cost rival Ryanair is meanwhile the biggest single shareholder in Aer Lingus and has itself made three failed attempts to buy the airline since 2007.

Ryanair owns about 30 percent and the Irish state's holding is one-quarter of Aer Lingus.

IAG chief executive Willie Walsh meanwhile was boss of Aer Lingus between 2001 and 2005, before he took the reins at British Airways.

BA and Iberia subsequently merged in 2011 in a tie-up aimed at cutting costs amid a painful economic downturn that boosted demand for low-cost competitors and sparked steep losses for traditional carriers.

© 2015 AFP

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