Aer Lingus shareholders urged to take no action on Ryanair bid
Aer Lingus has urged its shareholders not to take any action following Ryanair's latest takeover bid.
The low-fares airline yesterday made a surprise cash offer to buy out the former state carrier, just a day after Britain’s competition commission began a full investigation into Ryanair’s 29.8% holding in the airline.
Ryanair has offered €1.30 per share, slightly less than the €1.40 per share offered in a 2008 takeover bid. The offer places an overall value of approximately €694m on the former national airline.
In a statement this morning the board of the airline said it has noted Ryanair's announcement - and will make a statement in due course.
"The Board of Aer Lingus Group plc notes the announcement by Ryanair Holdings plc of its intention to make a third unsolicited offer for 100% of the entire issued, and to be issued, share capital of Aer Lingus," the statement read
"Aer Lingus will make a statement in due course. In the meantime, Aer Lingus shareholders are urged to take no action."
Fianna Fáil is calling on the Government to use its 25% stake in Aer Lingus to block the bid.
Transport spokesman Timmy Dooley said a consolidation of the two airlines would result in reduced competition, increased fares and less choice.
He said a potential hike in fares in particular would be bad for the country’s economic recovery and efforts to boost exports.
Ryanair chief executive Micheal O’Leary yesterday said the offer represents good value for Aer Lingus’s shareholders, and would keep control of Aer Lingus in Ireland.
"We believe that Ryanair’s offer of €1.30 now offers Aer Lingus’s long-suffering shareholders a real and meaningful return which represents a 38.3% premium to its closing price of €0.94 on Tuesday, 19 June, 2012," said Mr O’Leary.
"It allows the Irish Government to deliver the first of its assets sale obligations to the troika, and it enables Aer Lingus to secure a financially strong, Irish-based, airline partner committed to keeping Aer Lingus as a separate airline while developing the Aer Lingus brand and business."
The main obstacle to any takeover would be the European Commission, which investigated an earlier Ryanair bid for Aer Lingus and decided to block it in Jun 2007. Ryanair has stated it would be willing to address any concerns held by the commission prior to completing a bid.
The Government has not commented on the development. It is understood Transport Minister Leo Varadkar is to discuss the issue with his colleagues in Cabinet before issuing a statement.
The Government announced plans earlier in the year to sell €3bn of state assets, including parts of energy suppliers Bord Gáis and ESB Electric Ireland.
It also identified its remaining 25% stake in Aer Lingus as a non-strategic asset and revealed it would sell its share when the best offer came along.
Public Expenditure Minister Brendan Howlin said at the time that money raised from the sale would go towards job creation.
Mr Varadkar has in the past claimed the Government would accept no less than €1 per share for the airline.
Ryanair chief Mr O’Leary hopes to boost Aer Lingus’s passenger numbers by 4.5 million to 14 million over the next five years by forming “one strong Irish airline” to compete with major European players.
A previous takeover attempt in 2006 was rejected by regulators but Ryanair said consolidation and the economic downturn had left Aer Lingus “exposed as a small and uncompetitive airline”.
