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Aer Lingus board recommends US$1.5b offer from BA: owner IAG
[DUBLIN] The board of Irish airline Aer Lingus has recommended an improved 1.36-billion-euro (S$2.04 billion) takeover offer from the owner of British Airways which now must sooth government concerns to win shareholder approval.
The new proposal from International Consolidated Airlines Group (IAG), its third in six weeks, is worth 2.55 euros per share, up from 2.40 euros, and includes a cash offer of 2.50 euros per share and a dividend of 0.05 euros.
Aer Lingus said its recommendation is subject to being satisfied with how IAG proposes to address the interests of relevant parties including its top shareholders, budget airline Ryanair and the Irish government, which is facing mounting political pressure not to sell.
IAG said it intends to operate Aer Lingus as a separate business with its own brand, management and operations. "IAG recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Irish Government in order to secure its support for the transaction," IAG said in a statement.
A successful takeover would give IAG more take-off and landing slots at London Heathrow Airport, BA's home base and a major European hub for international flights.
It said Aer Lingus would join the joint business that IAG operates over the North Atlantic with American Airlines, leveraging traffic flows between Ireland and the United States.
Ryanair, which still holds 29.8 per cent after its takeover attempts were blocked and currently faces a regulatory order to cut its stake to 5 per cent, said last week it would give due consideration to any offer.
The government had sought to sell its stake as part of the country's 2010 bailout by the European Union and International Monetary Fund but postponed the plan. It has been urged by the two main opposition parties to rule out any sale, raising the stakes just over a year before elections are scheduled.
Transport Minister Paschal Donohoe, who will brief cabinet on the proposal on Tuesday, has said the decision to be made will involve more than just looking at the price.
Donohoe said the government would examine how a merger would affect Aer Lingus workers, its brand and both connectivity and competition for air routes out of the island nation.
Aer Lingus's main trade union IMPACT has said that a takeover could lead to the loss of up to 1,200 jobs, a quarter of the carrier's workforce.