Board urges rejection of Ryanair bid

The Aer Lingus board has once again called on its shareholders to reject Ryanair’s takeover bid ahead of key EU Competition deadline next Wednesday.

The EU’s Competition Directorate is currently in phase one of its investigation into the offer and on Aug 29 it is due to either approve it or recommend the investigation enter phase two. It cannot reject the offer outright at this stage.

If the investigation goes to phase two, it will take a further 90 working days — stretching the outcome to Feb of next year.

At the end of July, Aer Lingus wrote to the shareholders to outline the reasons why the offer from the rival airline of €1.30 per share undervalued it

With the phase one deadline looming, yesterday’s communication to shareholders was the former national airline’s last opportunity before next Wednesday’s deadline.

It said the board “unanimously recommends shareholders take no action in relation to the offer and should not sign any document sent by Ryanair or its advisers”.

It also gave revised figures on what the offer represents including:nA discount of 34% to Aer Lingus’ gross cash per share of €1.96 (total €1,049.9m). It said the gross cash on Aer Lingus’s balance sheet “more than pays for Ryanair’s offer”.

nA discount of 12% to Aer Lingus’s Net Asset Value per share of €1.48 based on the NAV shown in the June 30, 2012 balance sheet. Aer Lingus said: “This NAV does not attribute any value to either our attractive slot portfolio or brand.”

“Aer Lingus is a strong and profitable airline with a proven business model; a strong balance sheet; and an internationally recognised and valued brand,” it said. “Aer Lingus delivered a €130m turnaround in operating performance between 2009 and 2011.”

It said the group continues to make “strategic, operating and financial progress” as reflected by its first half results for this year.

There were reports just over a week ago that Ryanair had offered to pull a number of Aer Lingus routes if it is allowed to take over the rival airline.

However, Ryanair described as “rumour and speculation” reports it was holding discussions with the Competition Directorate and was offering to curtail some Aer Lingus routes to create more competition.