The Irish flag carrier rebuffed the offer from the British Airways parent company run by former Aer Lingus boss Willie Walsh.
With Aer Lingus rejecting the IAG approach it is increasingly apparent that Ryanair, Europe’s largest airline, will play the kingmaker if the takeover goes hostile, The Times reported.
The low cost carrier holds a 29% stake in Aer Lingus and there was growing speculation last night that chief executive Michael O’Leary could vote his stake in favour of IAG’s overtures.
In addition to the Ryanair shareholding, built up during three failed takeover attempts in recent years, 25% of the airline is owned by the Irish government. A further near-5% is held by Etihad Airways.
Sources in Dublin were last night suggesting the hand of O’Leary in the timing of IAG’s approach, according to the newspaper.
The UK’s Competition and Markets Authority is due to make a ruling soon that could result in the forced disposal or sell-down of Ryanair’s Aer Lingus stake on the grounds of market interference.
“Do you think Ryanair would rather have some regulator forcing it to sell its shares at a predetermined price or do you think it would rather take control of the situation and do a deal on its own terms?” a source was quoted as sayings. “Ryanair has spent its whole life trying to destabilise Aer Lingus.”
“With Ryanair intent on remaining kingmaker whether or not it can hold onto its block-holder 25% stake in Aer Lingus, this will once again be Willie Walsh versus Michael O’Leary battle,” Neil Shah, director of research at investment firm Edison, told The Telegraph.
IAG and Ryanair previously teamed up in Ryanair’s third abortive takeover of Aer Lingus, when IAG stepped in to offer to take Aer Lingus’s take-off and landing slots at Heathrow as a potential competition remedy.
Aer Lingus’s 23 slot pairs at Heathrow are seen to be central to the IAG approach. Aer Lingus is the third-largest holder of slots at Heathrow, where such pairs can be worth at least £30 million each.
Walsh was credited with saving Aer Lingus in a massive post-9/11 cost-slashing programme. On the back of that he was handed the chief executive’s job at BA in 2005, later becoming chief executive at IAG.
With Aer Lingus’s shares soaring following bid speculation, IAG was forced to confirm that it had “submitted a proposal to make an offer for the company which has been rejected by the board of Aer Lingus”.
Aer Lingus said later: “The board confirms that on December 14 it received a preliminary, highly conditional and non-binding approach from IAG.
“The board has reviewed the proposal and believes that it fundamentally undervalues Aer Lingus and its attractive prospects. Accordingly the proposal was rejected on December 16.”
BA and Aer Lingus previously had a joint venture that saw the airlines operate as one on the London-Dublin route.
Sourced from Travel Weekly