IAG poised to complete takeover of Aer Lingus
DUBLIN/BRUSSELS: IAG SA is set to complete its takeover of Aer Lingus after Ryanair said it would accept the offer and a source familiar with the matter told Reuters the British Airways-owner would gain conditional EU approval.
IAG’s plan to buy Aer Lingus and build a new transatlantic hub at Dublin airport depended on agreement from Ryanair, which holds a 30% stake in Aer Lingus, and the Irish government, which agreed to sell its 25% stake in May.
“It is set to clear the final hurdle and gain European Union antitrust approval for the €1.3-billion ($1.5 billion) bid after improving concessions to ease competition worries,’’ a person familiar with the matter said yesteriday.
The concessions were made ahead of a July 15 deadline and include giving up some airport slots in London and special agreements with rivals, the source said.
Ryanair had fully written down the value of its Aer Lingus stake, built up during several failed takeover attempts of its own dating back to 2006. That means the proceeds, slightly more than Ryanair spent accumulating its stake, will boost its finances.
“We believe the IAG offer for Aer Lingus is a reasonable one in the current market and we plan to accept it, in the best interests of Ryanair shareholders,” Ryanair chief executive Michael O’Leary said in a statement.
A spokeswoman for IAG said it welcomed Ryanair’s statement.
Cantor analyst Robin Byde said he wasn’t surprised IAG eventually won the support of Ryanair, which he said could now use the €400 million of proceeds to accelerate planned share buy-backs or pay further special dividends
“I don’t think they see IAG as particularly competitive with their own business so there was no reason to hold back further. It’s a straight commercial decision,” Byde said.
“It’s a stake they no longer needed to hold, it had no utility. It increases their cash even more at a time when they’ve got very large new aircraft orders and also they can pay another special dividend.”
Ryanair said in May it expected to make a profit of €940-970 million in the year to end-March 2016.