IAG con­sid­ers bid for Nor­we­gian

The Irish Times - Business - - MARKETS -

Aer Lin­gus-owner IAG is con­sid­er­ing a bid for Nor­we­gian Air Shut­tle, sources said, in a po­ten­tial deal that would help the group boost its mar­ket share amid in­creas­ing com­pe­ti­tion from low-cost car­ri­ers.

A po­ten­tial deal could value the Nor­we­gian com­pany, which has a mar­ket value of more than $1 bil­lion (€810 mil­lion), at about $3 bil­lion in­clud­ing debt, the sources said, ask­ing not to be iden­ti­fied be­cause the de­lib­er­a­tions are con­fi­den­tial. The com­pany may still de­cide against a bid, they said.

Fol­low­ing a Bloomberg re­port, IAG said it con­sid­ered Nor­we­gian to be an “at­trac­tive in­vest­ment” and had ac­quired a 4.61 per cent own­er­ship po­si­tion in the air­line. “The mi­nor­ity in­vest­ment is in­tended to es­tab­lish a po­si­tion from which to ini­ti­ate dis­cus­sions with Nor­we­gian, in­clud­ing the pos­si­bil­ity of a full of­fer for Nor­we­gian,” the car­rier said in a state­ment.

Rep­re­sen­ta­tives for Nor­we­gian Air de­clined to com­ment.

Adding Nor­we­gian would jolt IAG’s foray into low-cost, long-haul ser­vices into hy­per­drive. The owner of Bri­tish Air­ways has al­ready ex­panded its dis­count Level and Aer Lin­gus long-haul di­vi­sions, while adding Euro­pean air­port slots from failed Bri­tish Monarch Air­lines. In Fe­bru­ary, IAG pre­dicted higher earn­ings this year as prices gain, costs fall and the group ex­pands ca­pac­ity for Level. “Ev­ery­body in Europe wanted to buy us,” Nor­we­gian Air chief ex­ec­u­tive Bjorn Kjos said in an in­ter­view this month. How­ever, the com­pany had been in­vest­ing in its air­craft, and he would not con­sider sell­ing the busi­ness un­til the in­vest­ments started pay­ing out. “If you de­cide to sell, that is when you take in other in­vestors, but that has not been on our agenda at all.”

Shares of Nor­we­gian Air soared as much as 26 per cent, the most in its his­tory, be­fore trad­ing was halted in Oslo, boost­ing its mar­ket value to 8.3 bil­lion kro­ner ($1 bil­lion). The stock had ear­lier jumped about 10 per cent this week.

– Bloomberg .

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