11th Jun 2015 08:03
LONDON (Alliance News) - The UK anti-trust regulator Thursday issued a final order requiring Ryanair Holdings PLC to sell down its 29.8% stake in Irish rival Aer Lingus Group PLC to 5%, boosting International Consolidated Airlines Group's chances of successfully acquiring Aer Lingus.
The final ruling should mark the culmination of a long-running battle between the regulator and Ryanair, which has several times said it should not be required to sell down the stake it had built up when trying to buy Aer Lingus itself. However, Ryanair said Thursday that it will appeal the regulator's "ridiculous" ruling to the Competition Appeal Tribunal, and will also seek permission to appeal the "unsustainable" 2013 report that contained the CMA's initial arguments to the UK supreme court, which could delay the takeover of Aer Lingus by IAG.
The Competition and Markets Authority had released a provisional decision in April saying it still expected Ryanair to comply with its initial order to sell down the Aer Lingus stake, after Ryanair said IAG's bid for Aer Lingus had changed the situation. The regulator disagreed. It has now confirmed that sale order.
Ryanair was typically forthright in its response, calling the CMA's decision "ridiculous" and "manifestly wrong" and saying it "flies in the face" of the current IAG takeover offer for Aer Lingus.
"When the only basis for the CMA's original divestment ruling was that Ryanair's minority shareholding was or would prevent other airlines making an offer for Aer Lingus, the recent offers by IAG for Aer Lingus totally disprove and undermine the bogus theories and invented evidence on which the CMA based its untenable divestment ruling," Ryanair said.
"Simon Polito and his group were unable to establish any consumer harm arising from Ryanair's minority stake in Aer Lingus and instead resorted to speculating (in the CMA's August 2013 report) that Ryanair's 29.8% shareholding would deter other airlines from merging with or bidding for Aer Lingus. IAG's current offer for Aer Lingus proves that the the CMA's invented theory of harm was hopelessly wrong, and is now unsustainable given that the circumstances have manifestly changed, and accordingly the divestment remedy must be revoked in light of this compelling evidence," it added.
IAG has made a EUR1.4 billion offer for Aer Lingus, and has won the backing of the Irish government for the deal, the Irish flag carrier's other major shareholder. That meant the success of the bid is dependent on Ryanair accepting the deal.
"IAG's bid for Aer Lingus is dependent on securing Ryanair's agreement to sell its shareholding. This recent development illustrates that Ryanair can decide whether a bid for its major competitor on UK/Irish routes succeeds or fails," said Simon Polito, chairman of the Ryanair/Aer Lingus inquiry group at the CMA.
"This concern was an important part of our decision to require Ryanair to reduce its shareholding. It's not good for competition when one company holds such an influence over the future of one of its major competitors," he added.
"Although at this point Ryanair has yet to decide whether to sell its shares to IAG, we need to ensure that, whatever happens in relation to this particular transaction, Ryanair's ability to hold sway over Aer Lingus is removed," he said.
The regulator said it would ensure that the implementation of Ryanair's share sale order "interacts effectively" with the IAG bid process for Aer Lingus and with the European Commission's assessment of the bid.
Aer Lingus noted the CMA's announcement, and its pledge to ensure that the implementation interacts effectively with the IAG takeover offer and the European Commission's assessment of the offer.
Ryanair shares were up 1.1% at EUR11.87 in London Thursday morning, while Aer Lingus was flat at EUR2.42 and IAG was up 0.7% at 526.00 pence.
By Steve McGrath; [email protected]; @stevemcgrath1
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