Ireland-based Ryanair Holdings Plc (RYAAY: Quote,RYA.L) said Tuesday that it plans to make an all-cash offer of 1.30 euros per share for rival Aer Lingus Group plc (AERL.L), valuing that company at about 694 million euros or $879 million. This is the airline's third bid for Aer Lingus as part of its efforts to create a single Irish airline group.
The offer represents a 38.3 percent premium over Aer Lingus' closing stock price of 0.94 euros on Tuesday. The offer price is in addition to the dividend for each Aer Lingus share of about 0.03 euros declared by Aer Lingus on May 4 and payable on July 31.
Ryanair, Europe's largest budget airline, intends to make the offer through its wholly-owned subsidiary Coinside Ltd. The airline already hold a 29.82 percent stake in Aer Lingus, which it largely acquired in late 2006 and early 2007.
Ryanair had first tried to acquire Aer Lingus in late 2006, but that bid was blocked by the European Commission on antitrust grounds. Earlier this month, the UK Competition Commission said it will probe Ryanair's minority shareholding in Aer Lingus under the UK's merger control legislation.
Ryanair said it believes its latest offer is the best way for Aer Lingus to continue to be owned, controlled and managed from Ireland for the benefit of Irish citizens and visitors. The company also said that "circumstances have changed materially" since its first unsuccessful bid for Aer Lingus in 2006.
Ryanair noted that the as the air transport market in Europe consolidates into five large airlines/groups led by Air France-KLM (AFLYY.PK), British Airways, Easyjet plc (EZJ.L), Deutsche Lufthansa AG (DLAKF.PK) and Ryanair, the long-term future of Aer Lingus can best be secured within one strong Irish airline group, led by Ryanair, under which Aer Lingus' fares and unit cost can be reduced and its recent traffic decline can be reversed.
The Irish government continues to hold 25 percent of Aer Lingus after the airline was privatized in 2006. However, the government plans to sell the stake as part of its commitment under the European Union/International Monetary Fund bailout to sell off a proportion of state-owned companies.
Ryanair noted that Abu Dhabi-based Etihad Airways recently acquired a 2.99 percent stake in Aer Lingus and is reportedly interested in buying the government's stake when it is put up for sale. Ryanair said that in the event Etihad acquired the government's stake, it would be willing to work with Etihad to grow Aer Lingus successfully.
Further, Ryanair noted that as Dublin Airport now operated at only about 50 percent capacity, greater capacity created significant availability throughout the day, thereby removing a barrier to any new entrants to the airport.
RYAAY closed Tuesday's trading at $30.81, up $0.43 or 1.42 percent on 136,444 shares. AERL.L closed Tuesday's trading at 0.93 euros, down 0.03 euros or 3.63 percent on 16,249 shares.
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by RTT Staff Writer
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