Aer Lingus to accept IAG bid

BRITISH Airways boss Willie Walsh looks set to be third time lucky in his attempt to buy Aer Lingus with the Irish airline’s board expected to recommend a £1bn takeover, writes Laura Chesters.

British Airways owner IAG is reported to have made a third offer and raised its bid to €2.50 (£1.90) a share after its previous bids of around € 2.30 and € 2.40 were rejected.

The improved offer, which values the Dublin-based carrier at about €1.3bn (£970m), could see IAG and Aer Lingus make statements to the London Stock Exchange as early as today to explain that formal talks have begun.

But IAG still needs to win over Ireland’s government, which owns a 25pc stake in Aer Lingus. The government is keen to ensure flights between Dublin and Heathrow are retained.

Aer Lingus is the fourth busiest operator at London’s Heathrow and its desirable slots at the airport are part of the reason IAG has made its move.

Budget airline Ryanair holds 29.8pc of Aer Lingus and has made three previous attempts to buy its rival in the past but came unstuck amid competition concerns and has been told to cut its stake by the competition authority.

Ryanair founder and chief executive Michael O’Leary said last week that he is willing to discuss the sale of its stake with IAG, but as yet he had not been approached.

He also did not rule out a fourth rival bid. However the € 2.50 offer price will be tempting as Ryanair has already had to write down the value of its stake, and the current price is close to its €2.56 average break-even price.

IAG and Aer Lingus both declined to comment.