27th May 2015 11:47
LONDON (Alliance News) - International Consolidated Airlines Group has moved a step closer to sealing the acquisition of Aer Lingus Group PLC after the Irish flag carrier late on Tuesday once more recommended the deal and said the Irish government has now given its backing to the takeover.
Under the terms of the deal, IAG, the owner of British Airways and Spanish carrier Iberia, will pay EUR2.55 per share in cash for Aer Lingus, split between a EUR2.50 cash payment and a EUR0.05 cash dividend per Aer Lingus share. The offer is at a premium of 40% to Aer Lingus' closing price of EUR1.82 per share on December 17, the last day of dealing prior to the initial offer having been made. It is also at a 77% premium to the volume-weighted average price of Aer Lingus shares in the six months prior to the offer being made.
Aer Lingus shares closed on Tuesday at EUR2.38. Shares in the company were up 2.4% to EUR2.43 on Wednesday early afternoon, while IAG shares were up 0.6% to 547.92 pence.
The offer remains conditional on securing the approval of both the Irish government and budget carrier Ryanair Holdings PLC, both of which hold substantial stakes in Aer Lingus, along with it securing regulatory approval in Europe and the UK. The Irish government, on Tuesday, however, said that it supports the takeover bid from IAG after it was confirmed that Aer Lingus would keep its existing slots at Heathrow airport. The Irish Parliament, the Dáil, still has to vote on the approval.
IAG said Aer Lingus will keep its current slots at Heathrow and will operate its current daily winter and summer scheduled flights between Heathrow and Dublin, Cork and Shannon for at least seven years after the acquisition. The Aer Lingus brand also will be maintained under the deal.
Aer Lingus's Heathrow slots and its brand were at the centre of Irish government concerns over IAG's deal. Speaking in March in an interview with Ireland's Newstalk Radio, Irish Transport Minister Pascal Donoghue said that while its talks with IAG over the Aer Lingus deal had been "positive", it was seeking more assurances on measures to be taken to expand employment and protect Aer Lingus' brand identity and routes.
Donoghue said the Irish government at the time still held concerns about jobs and connectivity, echoing earlier statements made by Deputy Prime Minister Joan Burton, who also expected IAG to make further concessions to protect Aer Lingus' routes.
Aer Lingus itself has consistently backed the IAG takeover offer. Publishing its first-quarter results at the end of April, Aer Lingus said: "The board and management team of Aer Lingus strongly remain of the view that a combination of Aer Lingus and IAG has a compelling strategic rationale and will deliver significant benefits to all stakeholders in Aer Lingus."
On Tuesday, Aer Lingus Chairman Colm Barrington said: "This is a compelling transaction for Aer Lingus, its shareholders, its employees, its customers and for Ireland. Shareholders will realise an attractive return through the premium that the IAG offer provides over the level of our share price immediately prior to the announcement of IAG?s offer."
The indications are that Ryanair will accept the takeover offer, based on its opposition to the ruling made by the Competition and Markets Authority, the UK's antitrust regulator, that it must sell down its stake in Aer Lingus from 29.8% to 5%. Ryanair's initial request for the ruling to be overturned was made on the basis that IAG's bid for Aer Lingus undermines the CMA's view that Ryanair's substantial holding in Aer Lingus would deter any other companies from bidding for the carrier.
"Aer Lingus, Ireland and IAG would all benefit from this deal. Aer Lingus would maintain control of its brand and operation while gaining strength as part of a profitable and sustainable airline group in an industry that?s consolidating," said IAG Chief Executive Willie Walsh in the Aer Lingus statement Tuesday.
"Ireland?s vital air links to Europe and North America would be enhanced, creating new jobs, with cast-iron guarantees on ownership of Aer Lingus? Heathrow slots and their use on flights to Dublin, Cork and Shannon. Acquiring Aer Lingus would add a fourth competitive, cost effective airline to IAG, enabling us to develop our network using Dublin as a hub between the UK, continental Europe and North America, generating additional financial value for our shareholders," Walsh added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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