Friday January 16, 12:48 PM
Ryanair threatens to abandon Aer Lingus bid
DUBLIN (AFP) - Irish no-frills airline Ryanair (Dublin: RY4.IR - news) said Friday that it would not pursue its 748-million-euro (1.0-billion-dollar) bid for Aer Lingus (LSE: AERL.L - news) without the support of the rival carrier's shareholders.
The low-cost group said in a statement that it would not proceed with a lengthy and costly review process with the European Union Competition Commission unless the Irish government and employees back the bid.
Aer Lingus shareholders have shown almost no desire for a takeover by Ryanair, shunning its offer.
The no-frills carrier said Friday that it had notified the EU Competition Commission on January 8 about the proposed deal.
"Ryanair does not see any benefit for the parties in such a protracted and time-consuming process unless the proposed merger has significant prior support from Aer Lingus shareholders," the group said.
"Accordingly, Ryanair announces that it does not intend to engage in a lengthy Phase II review process with the EU unless it receives such support from Aer Lingus shareholders, including the acceptance of the offer by either the Irish Government or the ESOT (Employee Shareholder Ownership Trust)."
Ryanair chief executive Michael O'Leary added that there would not be a significant increase in its bid for Aer Lingus but he was willing to negotiate.
"If the government were to come to us, for example, and say, 'we're interested in selling our stake but not at this price, could we negotiate on price,' I think we would be, within reason, open to negotiating with all shareholders the possibility of a small increase in the price -- if that would get the deal over the line," he told Ireland's RTE state radio.
Ryanair revealed on January 6 that investors holding 29.83 percent of Aer Lingus shares had backed the former's cash offer launched in December.
However, with Ryanair already owning 29.82 percent, that meant that investors owning just 0.01 percent of the remaining Aer Lingus shares had backed the takeover.
Aer Lingus management had urged shareholders not to back the takeover when it was launched before Christmas. The offer remains open for acceptance until February 13.
Ryanair's bid is worth only half the 1.48 billion euros the low-budget carrier had offered for Aer Lingus in an unsuccessful takeover attempt in October 2006.
This time around, Ryanair offered 1.40 euros per outstanding share and said that it planned to operate both airlines as separate companies with distinctive brands.
The group's failed 2006 offer was strongly opposed by major Aer Lingus shareholders, including the Irish government, company employees, pilots and their pension fund.
It was ultimately blocked by EU anti-competition regulators.
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