IAG considers bid for Norwegian
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 .