International Airlines Group (IAG) (London), the parent company of British Airways (Heathrow), Iberia (Madrid) and low cost carrier Vueling Airlines (Barcelona), has revealed that the board of Aer Lingus (Dublin) has rejected a potential takeover attempt.
IAG confirmed in a stock exchange disclosure it had “submitted a proposal” to make an offer for Aer Lingus, but it added that this was “rejected by the board of Aer Lingus.”
IAG added: “There can be no certainty that any further proposal or offer will be forthcoming. A further statement will be made if and when appropriate,”.
“The board has reviewed the Proposal and believes that it fundamentally undervalues Aer Lingus and its attractive prospects. Accordingly, the Proposal was rejected on 16 December 2014,” Aer Lingus said in a stock market disclosure. “Shareholders are strongly advised to take no action.”
This is not the first time Aer Lingus has been the target of a takeover bid. Irish competitor Ryanair (Dublin) has made several attempts to acquire its fellow Irish carrier, but each of these efforts has been blocked on competition grounds.
Last September, a UK Competition Commission (UKCC) investigation into these unsuccessful Ryanair bids revealed that Aer Lingus was looking to combine with another carrier in 2012 and has more recently explored a variety of merger and acquisition scenarios. They also revealed that several sets of talks relating to Aer Lingus acquiring, merging and forming strategic initiatives with other airlines.
Ryanair was ordered to sell its 29.8% stake in Aer Lingus down to 5% by the UKCC, partly based on concerns the shareholding could jeopardize Aer Lingus’ consolidation with other carriers. Ryanair responded by putting its entire stake up for sale, with certain conditions. More recently Ryanair CEO Michael O’Leary has bemoaned a total lack of interest in the Aer Lingus stake.
O’Leary, speaking at the release of Ryanair’s first-quarter results this summer, said: “We’ve had depressingly received no interest in Aer Lingus stake, which has been up for sale for about 18 months.”
The takeover bid from IAG could have could have valued the Republic’s flag carrier at at least €1 billion, industry sources estimate. Earlier, Aer Lingus shares had jumped 14% after the Financial Times reported that IAG was considering a bid.
Reported by Assistant Editor Oliver Wilcock from Manchester.
Copyright Photo: SPA/AirlinersGallery.com. Aer Lingus A320-214 EI-DEN (msn 2432) approaches the runway in London (Heathrow).