IAG homes in on Aer Lingus
BRITISH Airways owner IAG is closing in on a takeover of Aer Lingus after tabling a sweetened £1billion offer for the Irish flag carrier.
Aer Lingus, which has rejected two previous approaches as "fundamentally undervaluing" the business, said the new terms were 2.50 euros a share in cash plus a 0.05 euros dividend per share.
Its board is considering the proposal but it said there can be no certainty that any offer will be made.
It added: "The revised proposal remains conditional on confirmatory due diligence, the recommendation of the board of Aer Lingus and the receipt of irrevocable commitments from Ryanair and the Minister for Finance of Ireland to accept the offer."
Michael O'Leary, chief executive of Ryanair, which holds nearly 30 per cent of Aer Lingus, said last week his board would consider any offer it received.
Ryanair seems resigned to walk away from an Aer Lingus combination of its own and we think it could be willing to accept this offer
The UK regulator has demanded Ryanair reduce its Aer Lingus stake to 5 per cent after failing in several takeover approaches of its own.
The Irish government, which has a 25.1 per cent stake, is facing rising political opposition to a sale.
It has flagged concerns about the fate of Aer Lingus's 20–plus lucrative landing slots at Heathrow Airport in London, where it is the fourth biggest operator after BA, Virgin Atlantic and Lufthansa.
IAG, formed in 2009 by a merger between BA and Spanish carrier Iberia, is led by Irishman Willie Walsh (pictured), formerly chief executive of Aer Lingus.
He opened the bidding last month with a 2.30 euros–per–share offer before raising it to 2.40 euros.
Buying Aer Lingus would enable IAG to take the pressure off an overcrowded Heathrow by funnelling some European travellers to the US through Irish airports, which allow passengers to clear US immigration and customs checks on Irish soil.
Broker Jefferies said: "On balance we sense this deal will get done, although it may run for some time.
"Ryanair seems resigned to walk away from an Aer Lingus combination of its own and we think it could be willing to accept this offer.
"Irish government approval is perhaps the bigger hurdle, with Dublin–London routes and long–haul routes from Ireland requiring preservation. Political wrangling could therefore drag the process on."
IAG shares climbed 13p to 549p, while Aer Lingus rose 2 cents to 2.37 euros.
