Ryanair renewed its hostile efforts to take over Aer Lingus by launching an all-cash offer on Monday, valuing its smaller Irish rival at €748m.
Europe’s biggest low-cost carrier is offering €1.40 a share for Aer Lingus, exactly half the level it offered in October 2006, when it valued the company at €1.48bn. The offer represents a 25 per cent premium to last Friday’s closing price of €1.12.
Ryanair’s earlier bid ran into opposition from the Irish government, which still holds a 25 per cent stake, and from the workforce. An employee share ownership trust still holds 14 per cent.
The original takeover bid was eventually blocked in June last year by the European competition authorities on the grounds the merged airline would have an overwhelming dominance at Dublin airport and in the Irish market.
Neelie Kroes, the EU competition commissioner, said last year a combination of the two carriers would have led to a near-monopoly in the Irish market and would have harmed passengers. ”Monopolies are bad for consumers because they reduce choice, lower quality and give rise to higher prices. Low cost carriers like Ryanair are no exception to this rule,” she said last year.
Ryanair, which already holds a stake of 29.82 per cent which it bought at an average price of €2.50, is still awaiting the outcome of its appeal against the European Commission ruling.
Michael O’Leary, Ryanair chief executive, said on Monday the group had decided to launch a new offer in the belief the competitive landscape had changed substantially with a wave of consolidation already under way in the European airline industry.
The original Ryanair/Aer Lingus deal is the only airline takeover to have been blocked by the European competition authorities. A host of other transactions are going ahead including Lufthansa taking over Brussels Airlines and BMI British Midlland, and Alitalia merging with Air One in Italy. Lufthansa is also bidding for Austrian Airlines and British Airways is in talks on a merger with Spain’s Iberia.
It was aiming to establish one of the Europe’s ”big four airlines” alongside Air France-KLM, Lufthansa and British Airways. It would be “financially strong” and headquartered in Dublin.
The combined group would handle around 68m passengers a year with a fleet of more than 200 aircraft, 850 routes and 33 bases across the European Union. http://www.ft.com/cms/s/0/a272e4ee-bf7d-11...00779fd18c.html