Etihad monitoring Ryanair's Aer Lingus takeover bid

Abu Dhabi airline owns a 3 percent stake in Irish flag carrier, which is subject to takeover bid
Etihad monitoring Ryanair's Aer Lingus takeover bid
By Shane McGinley
Thu 21 Jun 2012 10:31 AM

Etihad Airways said it is monitoring a possible takeover bid of Irish carrier Aer Lingus, which it owns a 3 percent stake in, by rival Irish no frills airline Ryanair, it was reported on Wednesday.

The Abu Dhabi carrier told Bloomberg it was monitoring the situation, as state-backed carrier Aer Lingus called on its shareholders to reject a fresh bid from Ryanair.

Aer Lingus said the surprise bid from Ryanair, made after the markets closed on Tuesday, undervalued the airline, also noting that Ryanair's first offer was rebuffed by the European Commission while its second offer was withdrawn.

"Consequently there is significant uncertainty that any offer from Ryanair, if made, would be capable of completion," the company said in a statement on Wednesday.

"The board, having considered the offer with its advisers, believes the offer, even if it is capable of completion, undervalues Aer Lingus," it added.

Ryanair, already the largest shareholder in Aer Lingus with a 30 percent stake said it would pay
€1.30 per share in a bid to increase its stake to at least 50 percent.

The acquisition of Ireland's 75-year old former flag carrier would fulfil a long-held ambition of Ryanair CEO Michael O'Leary, capping his transformation of an airline that started with one plane in 1985 into one of Europe's largest.

But the Irish government and European competition authorities, two key parties that helped block two earlier bids by Ryanair, refused to say whether they would back the bid.

Aer Lingus's second-largest shareholder is Ireland's government, which recently announced plans to sell its 25 percent stake.

Under pressure from its EU/IMF creditors to begin selling off state assets to help pay off debts, Prime Minister Enda Kenny said it had not yet decided whether to back the bid.

Ryanair's bid, which values the company at
€694m (US$878m), would earn the government
€174m, our of a
€3bn privatisation target.

Irish businessman Denis O'Brien, who owns 3.8 percent, declined immediate comment, as did Abu Dhabi's flagship carrier Etihad.

Etihad, which owns 3 percent, has been named in the media as a possible bidder for the government's 25 percent stake

"The alternative plot is that O'Leary knows he won't get regulatory approval and this is just a plan to flush Etihad out and to get them move and make a counter bid," Merrion Capital analyst Gerard Moore told Reuters.

A Ryanair spokesperson told Arabian Business in March the low cost carrier would be willing to talk to Eithad Airways about selling its majority stake in Aer Lingus.

“[Ryanair] will enter negotiations with anyone that purchases the government’s stake in Aer Lingus,” a spokesperson told Arabian Business in March. “Beyond that we don’t comment on or enter into rumour or speculation.”

* With Agencies

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