Ryanair launches latest Aer Lingus takeover bid

Ryanair has announced its intention to make an all cash offer of €1.30 per share for Aer Lingus Group, valuing the Irish flag-carrier at €694 million. The low-cost carrier outlined plans to make the offer through wholly-owned subsidiary, Coinside. Ryanair already owns 29.82 per cent of Aer Lingus, a stake which it largely acquired over five years ago in late 2006 and early 2007. Outlining the timing of the most recent bid, Ryanair explained it sees the air transport market in Europe inexorably consolidating into five large airlines/groups led by Air France, British Airways, easyJet, Lufthansa and Ryanair. As such the long term future of Aer Lingus, its brand and its growth prospects can best be secured within one strong Irish airline group, led by Ryanair, the low-cost carried said in a statement to marker earlier. Under the proposal, Ryanair argues Aer Lingus’ fares and unit cost can be reduced and its recent traffic decline can be reversed. The offer represents a premium of 38.3 per cent over the closing price of Aer Lingus shares yesterday. Ryanair chief executive Michael O’Leary explained: “This Offer represents a significant opportunity to combine Aer Lingus with Ryanair, to form one strong Irish airline group. “Since the European Commission recently approved BA’s takeover of British Midland (being the latest in a series of EU airline consolidations), and Etihad recently invested in Aer Lingus and there are reports that it has a “strong interest” to acquire the government’s stake, and since the Irish Government has decided to sell this stake, we believe now is the time to focus on the right long-term strategic partner for Aer Lingus.” Ryanair points to a wave of consolidation among European flag carriers as motivation for the move. Air France, which owns KLM, acquired a 25 per cent stake in Alitalia recently, while BA merged with Iberia to create IAG and then acquired British Midland (BMI). Lufthansa acquired Swiss Air and Austrian Air, as well as taking significant minority stakes in SN Brussels and SAS. Each of these transactions has been approved by the competition authorities. The Polish and Portuguese governments have also confirmed their intention to sell their national airlines, LOT and TAP, respectively. Contrary to these trends, Aer Lingus has since 2006 failed to find a consolidation partner and Ryanair believes that as a consequence, Aer Lingus remains a sub-scale, peripheral EU carrier which has no long term independent future. Ryanair may be assisted by a stipulation in the recent Irish bailout by the International Monetary Fund, European Union and European Central Band, which stages the government must sell its 25 per cent stake in the carrier to reduce national debts. However, no time frame has been imposed on any potential deal.