Ryanair to sell Aer Lingus stake to rival IAG
Jul. 10, 2015
DUBLIN (AP) — Ryanair has agreed to sell its shares in Irish rival Aer Lingus to IAG, putting the British Airways parent solidly on course to acquire the former Irish national airline.
Ryanair Chief Executive Michael O'Leary said Friday that the budget airline's board has voted unanimously to sell its nearly 30 percent stake in Aer Lingus, formally ending Ryanair's own nine-year effort to seize its Dublin-based competitor. British and European competition authorities had repeatedly blocked Ryanair's effort and ordered Ryanair to divest itself, but O'Leary still was fighting those rulings in various courts.
O'Leary called the IAG offer "a reasonable one in the current market" that would allow Ryanair, Europe's fastest-growing airline, to record "a small profit."
International Airlines Group unveiled its 1.3 billion euro ($1.45 billion) takeover bid for Aer Lingus in January. The bid now has won acceptance from all three key investors: top shareholder Ryanair; Aer Lingus' own board; and the Irish government, which retained a 25 percent stake when it privatized the airline in 2006.
IAG, which also owns Spain's Iberia airline, had made its takeover bid conditional on acceptance by Ryanair. It offered no immediate reaction to Ryanair's decision.
Grass-roots shareholders are expected to back the offer at a Dublin extraordinary general meeting Thursday. The deal still requires approval by European Union competition regulators.
IAG already has agreed to a package of concessions to Irish interests to win support from the government. These include giving the government an indefinite right to veto the sale of Aer Lingus' strategic landing slots at London's Heathrow Airport and a guarantee that those slots will be used to operate Irish routes for at least the next seven years.
Aer Lingus owns the fourth-most slots at Heathrow, Europe's busiest hub. Industry analysts have estimated their value alone at 450 million euros ($500 million).
IAG also has pledged to increase trans-Atlantic traffic operating from Ireland, boosting tourism and business opportunities for the island nation, which is heavily dependent on air links.
IAG chief executive Willie Walsh, a Dubliner, previously held the same position at Aer Lingus.
Shares in Ryanair and IAG rose more than 2 percent Friday, while Aer Lingus rose more moderately to IAG's bid price of 2.50 ($2.80) per share.