Ryanair offers €694m for Aer Lingus

Ryanair has made a surprise cash offer to buy out Aer Lingus, 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.

Ryanair chief executive Micheal O’Leary 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.”

An Aer Lingus spokesperson said the airline was not commenting on the offer.

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 budget airline said that the increase in capacity at Dublin Airport, the consolidation of airlines across Europe, and the Government’s commitment to the troika to sell its stake in Aer Lingus resulted in a different set of circumstances.

The most significant development, Ryanair stated, was the consolidation of the two largest airlines operating out of Heathrow. The green light for IAG’s (BA and Iberia) takeover of BMI paves the way for Ryanair to attempt a similar move in acquiring Aer Lingus.

However, an analyst with NCB Stockbrokers, Brian Devine, said the deal was unlikely to be approved.

“It is very hard to see how it would be accepted by European competition authorities,” said Mr Devine.

Ryanair may even be able to gain a 50% controlling stake in Aer Lingus without having to buy the Government’s 25% holding.

The employee share ownership trust was disbanded in 2010 and its shares, representing 15% of Aer Lingus, were distributed to members.

Transport Minister Leo Varadkar said the Government would have to study the offer before making any comment.

Fianna Fáil transport spokesman Timmy Dooley urged the Government to prevent Ryanair’s takeover, saying it would harm competitiveness.

“The existence of Ryanair and Aer Lingus as separate competing entities has transformed our tourism and business connectivity,” said Mr Dooley. “Any material change to the separate status of these airlines would inevitably lead to reduced competition, increased fares and less choice.”

Meanwhile, Aer Lingus maintenance workers at Shannon Airport are to ask colleagues at Dublin and Cork airports to support a ballot for “protective action” over plans to sell off the Shannon hangar and impose redundancies.

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